IV.A.2.c. Claim Type 05 - Supplemental Claims/Remittances (09/30/16)

Owned by Kacey Olson
Nov 25, 2018
8 min read

© HUD Single Family Housing Policy Handbook 4000.1

The Mortgagee may submit a supplemental claim under Claim Type 05.

Included in this section are:

i. Definition

ii. Standard

iii. Overpayments and Funds due HUD

iv. Hazard Insurance Refund Adjustment

v. Deficiency Judgments

vi. Attorney Fees

vii. Claims for Additional Funds

viii. Submission of Supplemental Claim Form Parts to HUD

ix. Variance Requests for Additional Supplemental Claim Submissions

x. Appeals of Supplemental Claim Disposition

i. Definition

A Supplemental Claim is a claim readjusting the initial claim payment due to delayed disbursements or claim calculation or payment errors.

ii. Standard

The Mortgagee may submit one supplemental claim within six months of final settlement for conveyance claims or full settlement for all other claim types in the following circumstances:

  • when a vendor delays submitting an invoice to the Mortgagee for an allowable expense;
  • for amounts paid after the date the original claim was filed if the obligations were incurred before the deed or assignment to HUD was filed for record or was paid on HUD’s written instruction;
  • requests for reconsideration of disallowed costs; or
  • additional attorney fees not paid on the original claim.

The Mortgagee may submit subsequent supplemental claims in the following circumstances:

  • overpayments due to HUD;
  • hazard insurance refund adjustments;
  • deficiency Judgments;
  • additional unpaid principal balance, with debenture interest, not paid on the original claim; or
  • where the Mortgagee has received approval from the National Servicing Center (NSC) to file a subsequent supplemental.

The Mortgagee may not submit supplemental claims prior to receipt of the original Part B payment except when Part A was overpaid.

iii. Overpayments and Funds due HUD

(A) DefinitionAn Overpayment is HUD’s payment of a claim in an inaccurate amount that results in money owed by the Mortgagee to HUD.

(B) Claim Involves OverpaymentIf the claim involves an overpayment, the Mortgagee must:

  • remit amounts due; and
  • retain in the Claim Review File a supplemental claim Part A explaining how the overpayment occurred in the “Mortgagee’s comments” section.

(C) Claim Involves a Computation of InterestIf the amount overpaid or received involved a computation of interest, the Mortgagee must:

  • remit amounts due to HUD, including in the reimbursement:
    • interest calculated by the Mortgagee and included in Part B; and
    • interest calculated by HUD for the period from the date of claim to the date of payment; and
  • retain in the Claim Review File a supplemental claim Part A explaining how the overpayment occurred in the “Mortgagee’s comments” section.

(D) Remittance of Amounts DueThe Mortgagee must remit amounts due via pay.gov using the Claim Remittance functions in FHAC.

iv. Hazard Insurance Refund Adjustment

(A) StandardThe Mortgagee may submit a supplemental claim for a hazard insurance refund adjustment when it has met all of the following conditions:

  • hazard insurance costs were included in the initial submission of form HUD-27011, Part B; and
  • the Mortgagee has documented in its Claim Review File its efforts in diligently following up with the hazard insurance carrier to confirm any necessary adjustment.

When the Mortgagee becomes aware of a hazard insurance refund within six months of final settlement, the Mortgagee must file its supplemental claim within six months of the final settlement; otherwise, the Mortgagee may submit its supplemental claim within one year from the date of final settlement.

(B) Claim Form PreparationWhen completing and submitting the supplemental claim, the Mortgagee must:

  • include a copy of the carrier’s notification with its submission; and
  • clearly indicate in the “Mortgagee’s comments” section that the supplemental claim is being filed to recover an adjustment to the hazard insurance premium refund.

v. Deficiency Judgments

The Mortgagee may submit one supplemental claim for the additional costs related to the pursuit of the deficiency Judgment when all such known costs were included in the initial submission of Part B of form HUD-27011, or, to the extent possible, are claimed within six months from the date of final settlement of the initial Part B.

vi. Attorney Fees

The Mortgagee may submit a supplemental claim for attorney fees if it believes that it is entitled to an amount more than was actually reimbursed in the initial claim payment. The supplemental claim must include:

  • a supplemental claim form HUD-27011, with an explanation of the need for the increased fee in “Mortgagee’s comments;”
  • a copy of all Parts submitted in the original claim filing;
  • a copy of the final Advice of Payment letter; and
  • copies of the attorney chronology and any documentation necessary to support the additional claimed amount.

The Mortgagee must retain in the Claim Review File adequate documentation supporting all attorney fees. Should HUD determine in a post-claim review that the claim for attorney fees is greater than allowed amounts or is unsupported by documentation, HUD will bill the Mortgagee for overpayment as:

  • an amount statistically calculated for all claims within the review period; or
  • the actual amount of the overpayment, if the review was not based on a statistical sample.

vii. Claims for Additional Funds

The Mortgagee may submit one supplemental claim for additional funds within six months of the date of final settlement for conveyance claims or full settlement for all other claim types. The Mortgagee may only file a supplemental claim before receipt of the original Part B payment when Part A was overpaid.

(A) Supplemental Claims for Correction of Dates in Part AWhen the claim for additional funds is based on a corrected date on the Part A claim, the Mortgagee must include:

  • the form HUD-27011 reflecting the corrected date(s);
  • the reason for the supplemental claim in the “Mortgagee’s comments” section;
  • the certification on the accuracy and validity of all other dates in the “Mortgagee’s comments” section; and
  • all supporting documentation.

(1) CertificationWhen the claim for additional funds is based on a corrected date on the Part A claim, the Mortgagee must provide with this supplemental claim a certification as to the accuracy and validity of all other dates on the Part A claim which affect time requirements and the payment of interest on the claim. This certification must include:

  • a statement that all such dates have been rechecked against the claim filing instructions in this SF Handbook; and
  • a statement describing the document referenced by the Mortgagee for each of these dates.

(2) Required Supporting DocumentationThe Mortgagee must provide the following supporting documentation for corrected claims:

  • Item 8, “Due date last complete installment paid”: Include Mortgage Payment history record.
  • Item 9, “Date of possession and acquisition of marketable title”: Include legal documentation such as sheriff’s deed recorded DIL, proof of eviction date, inspection report, and a chronology of events from the date in Item 11 to the date in Item 9.
  • Item 10, “Date deed or assignment filed for record or date of closing or appraisal”: Include recorded deed or assignment; Closing Disclosure or similar legal document; appraisal report and/or invoice reflecting correct date of the appraisal.
  • Item 11, “Date foreclosure proceedings (a) Instituted or (b) Date of deed in lieu”: Include documentation of first legal action taken to institute foreclosure, such as the complaint, or publication of notice of sale, or the recorded DIL.
  • Item 17, “Unpaid loan balance as of date in block 8”: Include copies of the mortgage Note and payment history record.
  • Item 19, “Expiration date of extension to foreclose/assign”: Include the printout from Extensions and Variances Automated Requests System (EVARS) of HUD’s approval (form HUD-50012, Mortgagee’s Request for Extensions of Time) of the extension.
  • Item 20, “Date of notice/extension to convey”: Include the printout of the MCM’s approval (form HUD-50012) from P260.
  • Item 21, “Date of release of bankruptcy, if applicable”: Include a copy of the bankruptcy release notice or release of stay.
  • Item 31, “Mortgagee reported curtailment date”: Include applicable documentation to support curtailment correction.
  • “Disbursements for Protection and Preservation”: Include the form HUD-27011 Part C filed with the original claim submission, with supporting documentation for all P&P expenses.
  • Disbursements (taxes, HIP, possessory action costs), foreclosure costs, attorney fees, bankruptcy costs, all other disbursements: Include documentation showing payment made, including paid receipts or invoices. If cost incurred after the date the deed or assignment was filed for recording, include a printout of the MCM’s approval from P260 to pay costs.
  • Taxes paid after date of deed to HUD: If taxes were paid after the date the deed or assignment was filed for recording, include a printout of the MCM’s approval from P260 for payment before filing a supplemental claim.

(B) Claims for Additional Funds when Subject to Administrative OffsetsThe Mortgagee must not claim additional funds when HUD is offsetting amounts.

(C) Claims for Funds Related to Partial ClaimsIf the Mortgagee claimed less than the actual Partial Claim note amount, the Mortgagee must absorb the cost of the miscalculation and must not:

  • claim the additional funds from HUD; or
  • add the deficient note amount to the Borrower’s mortgage balance.

HUD will not accept corrected Partial Claims.

viii. Submission of Supplemental Claim Form Parts to HUD

(A) To HUDThe Mortgagee must send to HUD:

  • the original Part A and Part B of the supplemental claim;
  • copies of Parts C, D, and E of the supplemental claim, if applicable;
  • supporting documents; and
  • copies of all Parts of the original claim.

For supplemental claims relating to SFLS claims, the Mortgagee must send the claim to:

U.S. Department of Housing and Urban Development
Asset Sales Office
451 7th Street, SW Room 3136
Washington, DC 20410
Attn: SFLS [Year]-[Sale Number] Supplemental Claims

For all other supplemental claims, the Mortgagee must send the claims to the following addresses:

Overnight Mail:

Department of Housing and Urban Development
FHA Single Family Claims Branch
ATTN: SUPPLEMENTAL CLAIMS
451 7th Street, SW, Room 6246
Washington, DC 20410-3000

Regular Mail:

Department of Housing and Urban Development
Office of Financial Services
Single Family Claims Branch
ATTN: SUPPLEMENTAL CLAIMS
P.O. Box 23297
Washington, DC 20026-3297

(B) To P260The Mortgagee must upload to P260:

  • copies of Parts A and B of the supplemental claim; and
  • the original Parts C, D, and E, of the supplemental claim, if applicable.

(C) Timeframe for Submission of Supplemental ClaimsFor supplemental claims involving overpayments identified by the Mortgagee, including its own QC reviews, the Mortgagee may submit a remittance of overpayments and funds received by the Mortgagee at any time.For supplemental claims involving recouping additional unpaid principal balance not reimbursed on the original Part A claim, the Mortgagee may submit a claim at any time.For all other supplemental claims, the Mortgagee must submit supplemental claims no later than six months after the date of final payment, except where noted below.

(1) Timeframe for Submission of Hazard Insurance Refund AdjustmentThe Mortgagee may submit a supplemental claim for a hazard insurance refund adjustment under any of the following conditions:

  • within six months from the date of final settlement of the original Part B claim; or
  • if the Mortgagee received the insurance carrier’s notification more than six months from the date of final payment, the Mortgagee must submit the supplemental claim within 24 Days from the date of the insurance carrier’s notification and must document in its Claim Review File its efforts in diligently following up with the hazard insurance carrier to confirm any necessary adjustment. HUD will not accept the supplemental claim for a hazard insurance refund adjustment more than one year from the date of final settlement.

(2) Timeframe for Submission of Deficiency Judgments CostsWhen HUD has required the Mortgagee to pursue a deficiency Judgment, the Mortgagee must submit one supplemental claim for the additional costs related to the deficiency Judgment within the latter of:

  • one year from the date of final settlement of the initial Part B; or
  • three months after the deficiency Judgment.

(3) Extension to Timeframe for SubmissionIf more than one year is needed to request reimbursement for related Housing Insurance Premium (HIP) adjustments or deficiency Judgments, the Mortgagee must request an extension from the MCM. When using an extension based on deficiency Judgments or HIP adjustments, the Mortgagee may not include in its supplemental claim other types of costs they may have failed to include in the earlier claim.The Mortgagee must include with its supplemental claim a printout of the MCM’s approval (form HUD-50012) via P260.

(4) HUD Requests for Corrections or Additional InformationSupplemental claims previously submitted and returned to the Mortgagee for a correction and/or for further information must be received by HUD as soon as possible but no later than 45 Days from the date of HUD’s letter and/or request.

ix. Variance Requests for Additional Supplemental Claim Submissions

The Mortgagee generally may only submit one supplemental claim. When circumstances outside of the Mortgagee’s control require the submission of additional supplemental claims, the Mortgagee must submit a request to the Single Family Claims Branch before filing a supplemental claim.

x. Appeals of Supplemental Claim Disposition

The Mortgagee may submit an appeal of a denied supplemental claim within 60 Days from the date the supplemental claim was denied to:

Department of Housing and Urban Development
Attn: Chief, Single Family Claims Branch
451 7th Street, SW, Room 6248
Washington, DC 20410

The Mortgagee must submit the request in writing and attach a copy of the supplemental claim with the supporting documents.