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l. Rescinding or Repurchasing a Claim (05/09/2022)
i. Voluntary Recall of a Claim
(A) Rescinding a Claim
The Lender may recall a claim at any point prior to claim payment. The rescission request must be sent in writing to the FOC and must clearly identify which claim is being recalled. The request must be in writing and signed by an authorized officer of the Lender.
(B) Repurchasing a Claim
A Lender may repurchase a claim for any reason if the claim payment amount is returned within 31 Days of the claim payment date. After 31 Days, HUD retains the right to determine whether it is in the best interest of HUD to return the claim. The repurchase request must be sent to the FOC and must clearly identify which claim is being recalled. The request must be in writing and signed by an authorized officer of the Lender. If repurchase is approved, the Lender must send a separate payment equal to the amount of the claim to the lockbox address for Title I payments.
ii. Involuntary Repurchase
FHA may demand that the Lender repurchase a Loan when the Note is invalid or unenforceable, or for violation of FHA’s regulations. FHA’s demand for repurchase may occur up to two years after the date that the claim is paid.
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IV. CLAIMS AND DISPOSITION C. Title I Claims
1. Title I Claims for Property Improvement
FHA may demand repurchase at any time with no time limit upon finding fraud or misrepresentation on the part of the claimant in the Loan’s origination. When a Loan is repurchased, FHA will return the claim file to the Lender.
Failure to return a claim payment after demand could result in interest, administrative costs and penalties being assessed against the Lender. Continued failure to pay may result in referral to HUD’s Mortgagee Review Board (MRB), the Department of the Treasury, or the Department of Justice (DOJ) for further action to enforce collection of the debt.