III.A.1.f. Servicing Fees and Charges (03/14/16)

Owned by Kacey Olson
Last updated: Nov 25, 2018
2 min read

© HUD Single Family Housing Policy Handbook 4000.1

Included in this section are:

i. Definition

ii. Standard

iii. Required Documentation

i. Definition

Allowable Fees and Charges are those costs associated with the servicing of the Mortgage that are permitted to be charged to the Borrower.

Prohibited Fees and Charges are those costs associated with the servicing of the Mortgage that may not be charged to the Borrower.

ii. Standard

(A) Reasonable and Customary Fees and Charges The Mortgagee may collect certain reasonable and customary fees and charges from the Borrower after the Mortgage is insured and as authorized by HUD below. All fees must be:

  • reasonable and customary for the local jurisdiction;
  • based on actual cost of the work performed or actual out-of-pocket expenses and not a percentage of either the face amount or the unpaid principal balance of the Mortgage; and
  • within the maximum amount allowed by HUD.

(B) Requests for Approval for Other Fees or Charges The Mortgagee may request approval from the National Servicing Center (NSC) for any fee, charge, or unusual service not specifically mentioned in this SF Handbook. The Homeownership Center (HOC) will determine the maximum amount of any fee based on what is reasonable and customary in the area.

(C) Prohibited Fees and Charges The Mortgagee must not charge the Borrower for the following services:

  • costs of telephone calls, telegrams, personal visits with the Borrower, certified mail, or other activities that are normally considered a part of a prudent Mortgagee’s servicing activity;
  • Mortgagee’s use of an independent contractor such as a tax service to furnish tax data and information necessary to pay property taxes or make the payments on behalf of the Mortgagee;
  • preparing and providing evidence of Payoff, Reconveyance, or termination of the Mortgage;
  • providing information essential to the Payoff;
  • recording the Payoff of the Mortgage in states where recordation is the responsibility of the Mortgagee; or
  • fees for services performed by attorneys or trustees who are salaried members of the Mortgagee’s staff.

iii. Required Documentation

The Mortgagee must include in the servicing file:

  • documentation of the amount of any fees and charges paid or payable by the Borrower; and
  • documentation supporting the actual cost of any work performed or out-of-pocket expenses.