13-29: PAYOFFS (09/94)

© HUD Single Family Housing Policy Handbook 4330.1 REV-5

A. Sale of Property by Mortgagor or Mortgagor's Estate. The mortgagor or the mortgagor's estate may sell the property at any time for the lesser of:

1. The debt due under the mortgage, including the mortgagee's share of net appreciation, if applicable, or

2. The appraised value at the time of the sale, as determined by the HUD Office having jurisdiction over the property. The mortgagor may request an appraisal if he or she believes that the value of the property is less than the debt.

NOTE:

The mortgage will be released of record and the net sales proceeds will be applied to the outstanding balance.

B. Contract for Sale Executed. If the mortgage is due and payable at the time the contract for sale is executed, the mortgagor may sell the property for the lesser of 95% of the current appraised value or the outstanding balance. The mortgage will be released of record and the net sales proceed will be applied to the outstanding balance.

C. Notification to HUD of Termination of Insurance. The mortgagee must notify HUD of the termination of the mortgage insurance contract within fifteen days of the date of any sale, if the net sales proceeds are sufficient to pay off the mortgage. Otherwise, the mortgagee should submit a claim for insurance benefits.

D. Shared Appreciation Mortgages. For shared appreciation mortgages, refer to Chapter 5, HUD Handbook 4235.1 REV-1 for instructions on calculating the mortgagee's dollar amount share of the property's appreciation.

E. Outstanding Balance Is Paid. The mortgagee must notify the Loan Management Branch of the HUD Office having jurisdiction over the property when the outstanding balance has been paid so that HUD may release the second mortgage from record.