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b. Foreclosure by Other Lien Holder (05/09/2022)
If another lien holder starts a foreclosure action against the Property that secures a Title I Loan, the Title I Lender must monitor the proceedings and participate as necessary to preserve its rights. HUD does not require that the Title I Lender bid at a foreclosure sale or acquire title to the Property. The Lender may submit a claim if the Title I Loan is in Default and otherwise eligible before, or after, the foreclosure action is completed.
If the Title I Lender elects to bid at a foreclosure sale to acquire title to the Property, then the Lender is “proceeding against the loan security” and the requirements outlined above will apply.
If the foreclosure action is completed prior to the Title I Lender submitting a claim to HUD, the Lender must determine if excess funds exist after foreclosure, and document that determination in the case binder. If excess funds are available, the Lender must take
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IV. CLAIMS AND DISPOSITION D. Title I Disposition
2. Property Disposition of Manufactured Homes
appropriate action to obtain them. The case binder must contain copies of all notices sent to the Title I Lender and document the Lender’s actions.