III.A.2.s. Acquiring Possession (03/14/16)

Owned by Kacey Olson
Nov 25, 2018
4 min read

© HUD Single Family Housing Policy Handbook 4000.1

On the date the deed is filed for recording, the Mortgagee must certify that the Property is vacant and free of Personal Property, unless HUD has agreed to accept title with the Property occupied. This, and the procedures described below, applies whether title is acquired by foreclosure or by DIL of Foreclosure.

Included in this section are:

i. Applicable Law Protecting Tenants

ii. Identification of Property Occupants

iii. Notice to Occupant of Pending Acquisition

iv. Occupied Conveyance Requests to HUD

v. Rents under Bona Fide Leases

vi. Preservation and Protection Costs due to Compliance with Applicable Law

vii. Cash for Keys Consideration

viii. Evictions and Eviction Personnel

i. Applicable Law Protecting Tenants

When determining compliance with the reasonable diligence requirement, the Mortgagee may exclude the time required to comply with federal, state, and local laws extending the time required to complete possessory actions.

ii. Identification of Property Occupants

Before completion of foreclosure the Mortgagee must:

  • confirm the identity of all occupants;
  • determine each occupant’s possible rights for continued occupancy under HUD’s Occupied Conveyance procedures; and
  • follow HUD’s Occupied Conveyance procedures by sending occupants the Notice to Occupant of Pending Acquisition (NOPA) 60 to 90 Days before the Mortgagee expects to acquire title.

iii. Notice to Occupant of Pending Acquisition

(A) Definition The Notice to Occupant of Pending Acquisition (NOPA) is a notice to the Borrower and heads of household that the Mortgagee will be acquiring title to the Property and then conveying Property to HUD.

(B) Standard At least 60 Days but not more than 90 Days before the Mortgagee reasonably expects to acquire title, the Mortgagee must notify the Borrower and each head of household occupying a unit of the Property of the possibility that the Mortgagee will convey the Property to HUD following foreclosure. The NOPA must:

  • provide a summary of the conditions under which continued occupancy is permissible;
  • advise the Borrower:
    • that potential acquisition of the Property by HUD is pending (see the NOPA Letter);
    • that HUD requires Properties be vacant at the time of conveyance to HUD, unless the Borrower or other occupant can meet the regulatory conditions for continued occupancy, the habitability criteria, and the eligibility criteria (see form HUD-9539, Request for Occupied Conveyance);
    • of the process for requesting to remain in the Property (see Continued Occupancy and/or Temporary Nature of Continued Occupancy); and
    • that the Property must otherwise be vacated before the scheduled time of acquisition; and
  • be sent via certified mail or with a signature confirmation service to ensure receipt of the notice by occupants.

(C) Required Documentation The Mortgagee must provide to HUD’s MCM by uploading into P260:

  • an electronic copy of each NOPA; and
  • all documentation and information obtained regarding existing leases and tenancies.

iv. Occupied Conveyance Requests to HUD

(A) Definition An Occupied Conveyance is the conveyance to HUD of a Property that is not vacant.

(B) Standard HUD will notify the Mortgagee if it has received an occupant’s request to remain in the Property. If the Mortgagee has not received such notification from HUD within 45 Days after sending the notices, the Mortgagee must convey the Property vacant, unless otherwise directed by the MCM.

(C) Approved Occupied Conveyance Requests If HUD grants Occupied Conveyance, the Mortgagee must convey the Property occupied under HUD’s Occupied Conveyance regulations and procedures provided by the MCM per 24 CFR § 203.670.

(D) Denied Occupied Conveyance Requests If HUD denies Occupied Conveyance, the Mortgagee must determine if there is occupancy protection under federal, state, or local law that would require the Mortgagee to delay possessory action. If the Mortgagee determines that such laws are applicable, the Mortgagee must:

  • follow those requirements before evicting the occupant; and
  • attempt to obtain documentation of existing leases and tenancies for the Claim Review File as evidence of the applicability of the occupancy protection laws and the additional time needed to comply with them.

v. Rents under Bona Fide Leases

The Mortgagee must attempt to:

  • collect rents payable under bona fide leases and tenancies providing post-foreclosure occupancy rights; and
  • in the event of default, take possessory action pursuant to the rental contract terms and applicable law.

The Mortgagee must reflect any rents it received during the term of the bona fide lease or tenancy on its claim for mortgage insurance benefits.

vi. Preservation and Protection Costs due to Extended Lease or Tenancy

The Mortgagee may request reimbursement of additional routine P&P costs, including lawn maintenance and inspections that are incurred as a result of an extended lease or tenancy under applicable law.

vii. Cash for Keys Consideration

(A) Definition Cash for Keys is a monetary consideration offered as an alternative to legal eviction to property occupants after foreclosure.

(B) Standard If property occupants fail to vacate the Property after receiving the first Notice to Quit, the Mortgagee may offer up to $3,000 per dwelling in exchange for the occupants vacating the property within 30 Days of the Cash for Keys Relocation Offer. Before releasing the funds, the Mortgagee must inspect the Property to ensure that:

  • the Property is in Broom-swept Condition; and
  • all built-in appliances and fixtures remain in the Property.

(C) Required Documentation The Mortgagee must document in its Claim Review File the date and amount of the Relocation Offer, the date of the actual vacancy, and the date the occupant received the funds.

viii. Evictions and Eviction Personnel

(A) Standard The Mortgagee must ensure that evictions are conducted in accordance with state and local law and:

  • with no more than four people for a townhouse or condominium; and
  • with no more than six people for a Single Family detached dwelling.

(B) Required Documentation The Mortgagee must include in the Claim Review File:

  • photographs showing that all Personal Property and debris have been removed from the Property as part of the eviction;
  • the number of people required and present to complete the eviction;
  • whether the eviction was canceled or re-scheduled; and
  • documentation supporting eviction costs, including those costs due to state or local law requirements for eviction timeframe, removal, or storage.