Since the economic downturn, it has been common for mortgage servicers to delay the submission of insurance claims to the Federal Housing Administration (FHA) so that the claims can be submitted in large batches, so as to hold down operating costs.
Unfortunately for the FHA, this has had the effect of creating large spikes in claims volume, which, in turn, has put a strain on staffing and slows down the claims process.
Seeking to spread claims out more, the FHA is proposing to establish a maximum time period for lenders to file insurance claims of three months. If approved, the proposal would require lenders to submit claims three months from the point at which they obtain marketable title to the property or successfully sell the property to a third party.
In addition, the FHA is proposing to revise its policy on reimbursement of eligible expenses and debenture interest when foreclosure and claim filing deadlines are missed.
Should a lender or servicer miss a foreclosure or claim filing deadline, it can still receive reimbursement; however, it will be subject to a deduction based on the number of days the foreclosure or claim filing deadline was past due.
The proposed rule change will be open for public comment for 60 days.