13-10: CHANGING THE PAYMENT PLAN (09/94)

© HUD Single Family Housing Policy Handbook 4330.1 REV-5

Generally, the mortgagor may request to change the payment plan at any time during the life of the loan. The mortgagee may charge a fee, not to exceed $20.00 for changing the mortgagor's payment plan.

A. When the mortgagor requests a change in his or her payment plan (i.e., changing payment options or the term of the payments), or the mortgagee must change the payment plan due to unexpected expenses (e.g., underestimated taxes and insurance or repair costs), the following action must occur:

1. The mortgagee must send to the mortgagor a written explanation of the terms of the new payment plan (Appendix 65) within five business days of receipt of the mortgagor's request. The mortgagor's request does not need to be in writing to be considered an official request.

2. The mortgagor must sign the written explanation and return it to the mortgagee.

3. Upon receiving the signed explanation of the payment plan, the mortgagee has five business days to complete the change and disburse any requested funds.

B. The Mortgagee Is Required To Change The Payment Plan. The mortgagee is required to change the payment plan whenever the mortgagor requests an unscheduled payment, and the mortgagor does not have a line of credit established or the line of credit is insufficient to cover the payment.

1. Payments from the mortgagor's line of credit do not constitute a change in the mortgagor's payment plan.

2. If a line of credit has not been established at closing and the mortgagor requests an unscheduled payment, the mortgagee should encourage the mortgagor to modify the payment plan by establishing a line of credit to prevent changing the payment plan for unscheduled payments in the future.

C. The Payment Plan Must Be Restarted. The mortgagee must change the payment plan when the payments are restarted on a monthly payment plan that has had payments suspended for a total of 6 months or more.