Compliance Calendar

The purpose of this announcement is to provide guidance for servicers completing foreclosures after the 8^th Circuit issued an order affirming a federal court decision in the Show Me State Premium Homes v. McDonnell (July 2023) that has an impact on federal liens after the foreclosure sale. The USDA Mortgage Recovery Advance (MRA) is a federal lien.

Handbook Chapter 18 guidance:

As outlined in Chapter 18 Section 18.11 Managing the Foreclosure Process [7 CFR 3555.306]: The servicer must manage the foreclosure process so that the property is liquidated in a cost effective, expeditious, and efficient manner. In states where more than one foreclosure method is available, the limits listed are based on the method that is most cost effective in reducing legal fees and interest expense.

Guidance around 8^th Circuit ruling:

• When available, servicers should use the less expensive non-judicial foreclosure method.
• If there are no excess funds available after the foreclosure sale that could be applied to the MRA, the servicer should prepare the lien release documents based on any requirements of the jurisdiction and send them to USDA for review and execution.
• If there are excess funds available after the foreclosure sale that could be applied to the MRA, the funds should be applied to the MRA until the funds have been exhausted. The servicer should then prepare the lien release documents based on any requirements of the jurisdiction and send them to USDA for review and execution.

Questions regarding program policy and this announcement may be directed to the National Office Division at sfhglpServicing@usda.gov or (202) 720-1452.

Thank you for supporting the Single-Family Housing Guaranteed Loan Program.

This Guide Bulletin announces:

• Rental income

➢ Greater specificity related to the eligibility of rental income

• Condominium and Cooperative Projects

➢ Project eligibility updates allowing all residential projects (Condominium Projects, Cooperative Projects and

Planned Unit Developments (PUDs)) to share Amenities

• Quality control

➢ An update related to documentation considered during quality control review

EFFECTIVE DATE

All of the changes announced in this Bulletin are effective immediately

Purpose - This Mortgagee Letter (ML) updates the Federal Housing Administration (FHA) Defect Taxonomy to clarify that fraud or material misrepresentation involving a sponsored Third-Party Originator (TPO) is a Tier 1 severity defect.

Effective Date - The provisions of this ML are effective immediately.

Affected Programs - The provisions of this ML apply to all FHA Title II Single Family mortgage programs.

Click the link to read the final rule.

Click the link to read the full circular.

Purpose - This Mortgagee Letter (ML) further extends the foreclosure moratorium in Maui County, Hawaii.

Effective Date - The provisions of this ML are effective immediately. The moratorium will remain in effect through January 1, 2025.

Affected Programs - The provisions of this ML apply to all FHA Title II Single Family Forward and Home Equity Conversion Mortgage (HECM) programs.

Summary of Changes - This ML:

• further extends the automatic foreclosure moratorium in III.A.2.n.ii Moratorium on Foreclosures for Properties located in Maui County, Hawaii; and

• provides relief for FHA-insured HECMs.

Purpose - This Dear Lender Letter (DLL) further extends the foreclosure moratorium in Maui County, Hawaii.

Effective Date - This DLL is effective immediately. The moratorium will remain in effect through January 1, 2025.

Affected Programs - This guidance applies to the Section 184A Native Hawaiian Housing Loan Guarantee (Section 184A) program.

This DLL supersedes DLL 2024-04.

Extension of Foreclosure Moratorium for Maui County, Hawaii - Properties located in Maui County, Hawaii, and guaranteed by the Section
184A program is subject to an extended foreclosure moratorium through January 1, 2025. The moratorium applies to the initiation of Section 184A
mortgage assignments to HUD and to the completion of Section 184A mortgage assignments already in process. Deadlines for the first legal action and reasonable diligence time frame are extended by 180 days from January 1, 2025.

Purpose - The purpose of this Dear Lender Letter (DLL) is to inform Section 184A Native Hawaiian Housing Loan Guarantee Fund (Section 184A) Lenders of
an update regarding Section 184A loan applications for certain properties located in the boundaries of the WMA FUDS.

Effective Date - This DLL is effective for Section 184A Case Numbers issued on or after the publication date of this DLL.

Affected Programs - This DLL applies to the Section 184A program. This DLL supplements Notices PIH 2017-25, CPD-19-07, and CPD-2023-09.

Summary of Changes - Section 184A loan applications for construction or ground-disturbing rehabilitation may now be considered for certain properties located within
the boundaries of the WMA FUDS.

Click the link to read the full bulletin.

This Lender Letter contains the policies previously published in LL-2021-12 on Dec. 14, 2022, with the changes noted below. It provides advance notice of upcoming changes to our Master Servicing processes and systems. These changes further simplify and streamline servicer reporting and will be introduced in a phased approach. These changes are not applicable to reverse mortgage loans.

Jul. 31, 2024

▪ Communicating updated reporting requirements based on remittance type and clarification of timing for summary reporting mortgage loans