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c. Claim Type 05 - Supplemental Claims/Remittances (03/01/2023)
The Mortgagee may submit a supplemental claim under Claim Type 05.
i. Definition
A Supplemental Claim is a claim readjusting the initial claim payment due to delayed disbursements or claim calculation or payment errors.
ii. Standard
The Mortgagee may submit one supplemental claim within six months of final settlement for conveyance claims or full settlement for all other claim types in the following circumstances:
• when a vendor delays submitting an invoice to the Mortgagee for an allowable expense;
• for amounts paid after the date the original claim was filed if the obligations were incurred before the deed or assignment to HUD was filed for record or was paid on HUD’s written instruction;
• requests for reconsideration of disallowed costs; or
• additional attorney fees not paid on the original claim.
The Mortgagee may submit subsequent supplemental claims in the following circumstances:
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IV. CLAIMS AND DISPOSITION A. Title II Claims
2. Claim Types
• overpayments due to HUD;
• hazard insurance refund adjustments;
• deficiency Judgments;
• additional unpaid principal balance, with debenture interest, not paid on the original claim; or
• where the Mortgagee has received approval from the Single Family Claims Branch to file a subsequent supplemental.
The Mortgagee may not submit supplemental claims prior to receipt of the original Part B payment except when Part A was overpaid.
iii. Overpayments and Funds Due HUD
(A) Definition
An Overpayment is HUD’s payment of a claim in an inaccurate amount that results in money owed by the Mortgagee to HUD.
(B) Claim Involves Overpayment
If the claim involves an overpayment, the Mortgagee must:
• remit amounts due; and
• retain in the Claim File a supplemental claim Part A explaining how the overpayment occurred in the “Mortgagee’s comments” section.
(C) Claim Involves a Computation of Interest
If the amount overpaid or received involved a computation of interest, the Mortgagee must:
• remit amounts due to HUD, including in the reimbursement:
o interest calculated by the Mortgagee and included in Part B; and
o interest calculated by HUD for the period from the date of claim to the
date of payment; and
• retain in the Claim File a supplemental claim Part A explaining how the overpayment occurred in the “Mortgagee’s comments” section.
(D) Remittance of Amounts Due
The Mortgagee must remit amounts due via pay.gov using the Claim Remittance functions in FHAC.
iv. Hazard Insurance Refund Adjustment
(A) Standard
The Mortgagee may submit a supplemental claim for a hazard insurance refund adjustment when it has met all of the following conditions:
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IV. CLAIMS AND DISPOSITION A. Title II Claims
2. Claim Types
• hazard insurance costs were included in the initial submission of form HUD- 27011, Part B; and
• the Mortgagee has documented in its Claim File its efforts in diligently following up with the hazard insurance carrier to confirm any necessary adjustment.
Refer to Time Frame for Submission of Hazard Insurance Refund Adjustment for guidance regarding the period during which such a supplemental claim may be submitted.
(B) Claim Form Preparation
When completing and submitting the supplemental claim, the Mortgagee must:
• include a copy of the carrier’s notification with its submission; and
• clearly indicate in the “Mortgagee’s comments” section that the supplemental claim is being filed to recover an adjustment to the hazard insurance premium refund.
v. Deficiency Judgments
The Mortgagee may submit one supplemental claim for the additional costs related to the pursuit of the deficiency Judgment when all such known costs were included in the initial submission of Part B of form HUD-27011, or, to the extent possible, are claimed within six months from the date of final settlement of the initial Part B.
vi. Attorney Fees
The Mortgagee may submit a supplemental claim for attorney fees if it believes that it is entitled to an amount more than was actually reimbursed in the initial claim payment. The supplemental claim must include:
• a supplemental claim form HUD-27011, with an explanation of the need for the increased fee in “Mortgagee’s comments;”
• a copy of all Parts submitted in the original claim filing;
• a copy of the final Advice of Payment letter; and
• copies of the attorney chronology and any documentation necessary to support the additional claimed amount.
The Mortgagee must retain in the Claim File adequate documentation supporting all attorney fees. Should HUD determine in a post-claim review that the claim for attorney fees is greater than allowed amounts or is unsupported by documentation, HUD will bill the Mortgagee for overpayment as:
• an amount statistically calculated for all claims within the review period; or
• the actual amount of the overpayment, if the review was not based on a statistical sample.
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IV. CLAIMS AND DISPOSITION A. Title II Claims
2. Claim Types
vii. Claims for Additional Funds
The Mortgagee may submit one supplemental claim for additional funds within six months of the date of final settlement for conveyance claims or full settlement for all other claim types.
(A) Supplemental Claims for Correction of Dates in Part A
When the claim for additional funds is based on a corrected date on the Part A claim, the Mortgagee must include:
• the form HUD-27011 reflecting the corrected date(s);
• the reason for the supplemental claim in the “Mortgagee’s comments” section;
• the certification on the accuracy and validity of all other dates in the “Mortgagee’s comments” section; and
• all supporting documentation.
(1) Certification
When the claim for additional funds is based on a corrected date on the Part A claim, the Mortgagee must provide with this supplemental claim a certification as to the accuracy and validity of all other dates on the Part A claim which affect time requirements and the payment of interest on the claim. This certification must include:
• a statement that all such dates have been rechecked against the claim filing instructions in this Handbook 4000.1; and
• a statement describing the document referenced by the Mortgagee for each of these dates.
(2) Required Supporting Documentation
The Mortgagee must provide the following supporting documentation for corrected claims:
• Item 8, “Due date last complete installment paid”: Include Mortgage Payment history record.
• Item 9, “Date of possession and acquisition of marketable title”: Include legal documentation such as sheriff’s deed, redemption documentation, receipt of sale funds, recorded DIL, proof of eviction date, inspection report, and a chronology of events from the date in Item 11 to the date in Item 9.
• Item 10, “Date deed or assignment filed for record or date of closing or appraisal”: Include recorded deed or assignment, transmittal letter to recording authority, or Closing Disclosure or similar legal document.
• Item 11, “Date foreclosure proceedings (a) Instituted or (b) Date of deed in lieu”: Include documentation of first legal action taken to institute foreclosure, such as the recorded complaint, or publication of notice of sale, or the recorded DIL.
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IV. CLAIMS AND DISPOSITION A. Title II Claims
2. Claim Types
• Item 17, “Unpaid loan balance as of date in block 8”: Include copies of the mortgage Note, Loan Modification (if applicable), and payment history record.
• Item 19, “Expiration date of extension to foreclose/assign”: Include the printout from Extensions and Variances Automated Requests System (EVARS) of HUD’s approval (form HUD-50012, Mortgagee’s Request for Extensions of Time) of the extension and/or supporting documentation for all automatic extensions.
• Item 20, “Date of notice/extension to convey”: Include the printout of the MCM’s approval (form HUD-50012) from P260 or support for the SFLS Claim Identification Date.
• Item 21, “Date of release of bankruptcy, if applicable”: Include a copy of the bankruptcy initiation document and release notice, release of stay, or discharge notice.
• Item 31, “Mortgagee reported curtailment date”: Include form HUD- 27011 Part D filed with the original claim submission, with applicable documentation to support curtailment correction.
• “Disbursements for Protection and Preservation”: Include the form HUD- 27011 Part C filed with the original claim submission, with supporting documentation for all P&P expenses.
• Disbursements (taxes, HIP, possessory action costs), foreclosure costs, attorney fees, bankruptcy costs, all other disbursements: Include documentation showing payment made, including paid receipts or invoices and supporting documentation. If cost incurred after the date the deed or assignment was filed for recording, include a printout of the MCM’s approval from P260 to pay costs.
• Taxes paid after date of deed to HUD: If taxes were paid after the date the deed or assignment was filed for recording, include a printout of the MCM’s approval for payment before filing a supplemental claim.
(B) Claims for Additional Funds When Subject to Administrative Offsets Not
Permitted
The Mortgagee must not claim additional funds when HUD is offsetting amounts.
(C) Claims for Funds Related to Partial Claims Not Permitted
If the Mortgagee claimed less than the actual Partial Claim note amount, the Mortgagee must absorb the cost of the miscalculation and must not:
• claim the additional funds from HUD; or
• add the deficient note amount to the Borrower’s mortgage balance.
HUD will not accept corrected Partial Claims.
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IV. CLAIMS AND DISPOSITION A. Title II Claims
2. Claim Types
viii. Submission of Supplemental Claim Form Parts to HUD
The Mortgagee must submit supplemental claims in accordance with HUD guidance pertaining to Claim Type 05 submissions. Mortgagees must submit supplemental claims electronically through the FHA Catalyst Claims Module, (A) or (B).
(A) FHA Catalyst: Claims Module
The Mortgagee must upload to the Claims Module:
• copies of the original Parts A and B of the supplemental claim;
• copies of Parts C, D, and E of the supplemental claim, if applicable;
• supporting documents; and
• copies of all Parts of the original claim.
(B) Time Frame for Submission of Supplemental Claims
For supplemental claims involving overpayments identified by the Mortgagee, including its own QC reviews, the Mortgagee may submit a remittance of overpayments and funds received by the Mortgagee at any time.
For supplemental claims involving recouping additional unpaid principal balance not reimbursed on the original Part A claim, the Mortgagee may submit a claim at any time.
For all other supplemental claims, the Mortgagee must submit supplemental claims no later than six months after the date of final payment, except where noted below.
(1) Time Frame for Submission of Hazard Insurance Refund Adjustment
The Mortgagee may submit a supplemental claim for a hazard insurance refund adjustment under any of the following conditions:
• within six months from the date of final settlement of the original Part B claim; or
• if the Mortgagee received the insurance carrier’s notification more than six months from the date of final payment, the Mortgagee must submit the supplemental claim within 24 Days from the date of the insurance carrier’s notification and must document in its Claim File its efforts in diligently following up with the hazard insurance carrier to confirm any necessary adjustment. HUD will not accept the supplemental claim for a hazard insurance refund adjustment more than one year from the date of final settlement.
(2) Time Frame for Submission of Deficiency Judgments Costs
When HUD has required the Mortgagee to pursue a deficiency Judgment, the Mortgagee must submit one supplemental claim for the additional costs related to the deficiency Judgment within the latter of:
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IV. CLAIMS AND DISPOSITION A. Title II Claims
2. Claim Types
• one year from the date of final settlement of the initial Part B; or
• three months after the deficiency Judgment.
(3) Extension to Time Frame for Submission
If more than one year is needed to request reimbursement for related Housing Insurance Premium (HIP) adjustments or deficiency Judgments, the Mortgagee must request an extension from the MCM. When using an extension based on deficiency Judgments or HIP adjustments, the Mortgagee may not include in its supplemental claim other types of costs they may have failed to include in the earlier claim.
The Mortgagee must include with its supplemental claim an electronic copy of the MCM’s approval (form HUD-50012).
(4) HUD Requests for Additional Information
Supplemental claims previously submitted and returned to the Mortgagee for further information must be received by HUD as soon as possible but no later than 45 Days from the date of HUD’s letter and/or request.
ix. Variance Requests for Additional Supplemental Claim Submissions
The Mortgagee generally may only submit one supplemental claim. When circumstances outside of the Mortgagee’s control require the submission of additional supplemental claims, the Mortgagee must submit a request to the Single Family Claims Branch before filing a supplemental claim.
x. Appeals of Supplemental Claim Disposition
The Mortgagee may submit an appeal of a denied supplemental claim within 60 Days from the date the supplemental claim was denied through the FHA Catalyst System or via an encrypted email to FHASupplementalClaims@hud.gov with the subject: Supplemental Claim Appeal XXX-XXXXXX.