13-24: ASSIGNMENT INSURANCE OPTION (09/94)

© HUD Single Family Housing Policy Handbook 4330.1 REV-5

The mortgagee may select the assignment insurance option at closing.

A. The Mortgage May Be Assigned To HUD If:

1. The outstanding balance, including all payments made to or on behalf of the mortgagor, MIP and accrued interest, is equal to or greater than 98% of the maximum claim amount as reflected on Form HUD-59100, Mortgage Insurance Certificate, or

2. The mortgagor has requested a payment, either from a line of credit or from a change in the payment plan, which, when added to the outstanding balance, would equal or exceed 98% of the maximum claim amount.

B. If the Mortgagee Chooses to Assign the Mortgage to HUD, the Following Conditions Must Be Met:

1. The mortgagee must be current in making the required payments to the mortgagor, and

2. The mortgagee must be current in making payments of MIP (including interest and late charges if any) and must continue making monthly payments until the assignment is recorded, and

3. The mortgage cannot be due and payable due to:

a. the death of the mortgagor (with no surviving mortgagor maintaining the property as a principal residence), or

b. the mortgagor has sold the property (conveyed title) and no other mortgagor retains title in fee simple, under a lease for not less than 99 years which is renewable or under a lease having a remaining term of 50 years beyond the 100th birthday of the youngest mortgagor.

4. The mortgagee has not notified the HUD Field Office of any event that might cause the mortgage to be due and payable, or the mortgagee's request to declare the mortgage due and payable has not been denied by the HUD Field Office.

C. Mortgagee Notifies HUD and Mortgagor of Its Intention to Assign. When the mortgagee notifies HUD of its intention to assign the mortgage, it must provide the mortgagor with a notice advising that the mortgage will be assigned to HUD. The notice must also state the following:

1. An anticipated date of assignment and instruct the mortgagor to make any request for unscheduled or line of credit payments after that date to HUD;

2. That HUD will continue to withhold an amount from the payments to the mortgagor in order to pay for taxes, if the mortgagee had been making these payments;

3. That HUD will not withhold payments for hazard insurance and that the mortgagor must maintain the insurance. The mortgagee must disburse to the mortgagor any funds withheld, but not spent on hazard insurance.