Section 247 Assignments

HUD has special procedures for mortgage insurance claims on properties located on Hawaiian Home Lands. Loans insured by HUD under Section 247 of the National Housing Act must be assigned to HUD at the time an insured lender files its timely claim for mortgage insurance benefits. A lender should consult 24 CFR §§203.439 and 203.665 for the special requirements which must be met prior to filing an insurance claim for loans with the Automated Data Processing (ADP) codes of 759, 780, 793, 805, 808 or 811 (last three digits of FHA case number).

Filing Claims

The Section 247 program goal is to help the Department of Hawaiian Home Lands (DHHL) in working with its native Hawaiian beneficiaries to preserve their homes. Unlike other FHA single family programs, claims can only be filed if all of the following conditions are met:

	After written notification to DHHL of the mortgagor's default
	After the mortgagor's default remains uncured after six months
	By assignment of the insured mortgage and mortgage note to HUD.

A lender will file their claim package (Form HUD-27011, Parts A, B and D) at the same time that they submit their request for title approval as noted in the section below entitled Submitting Title Evidence Package and Servicing Records.

Section 247 Assignment Claims may be submitted to HUD either electronically via HUD's Electronic Data Interchange (EDI) or by mailing the paper claim package to:

US Department of HUD

Attn: Single Family Claims Branch, HWAFPC

451 7th St., SW

Room 6251

Washington, DC 20410-8000

Note: Please enter eligible P&P expenses on form HUD-27011, Part D, line 305, and carry the total forward to Part B, line 111 for DHHL assignment claims. Do not use Part C of form HUD-27011 to claim eligible P&P expenses.

The following information is intended to provide the lender with the processing procedures for Section 247 Assignments.

Preconditions of Filing an Insurance Claim

A lender must determine that four (4) primary program requirements are met before submitting a claim for insurance benefits:

1. Mortgagor was in default for 180 days or more.
2. DHHL was notified of mortgagor's default by letter at 90 days.
3. Face-to-face interview(s) was conducted with the defaulting mortgagor at least 30 days before the application for assignment is made, unless this requirement is inapplicable under 24 CFR §203.604(c).
4. Mortgagor was properly evaluated for Loss Mitigation.

Processing Procedures for Section 247 Assignments

An FHA lender assigns the insured mortgage and note to HUD as part of the claims process. See 24 CFR §203.350(c). The Mortgage Note is conveyed by an authorized agent of the lender signing the following endorsement on the original note: "All right, title and interest of the undersigned to the within credit instrument is hereby assigned to the Secretary of Housing and Urban Development of Washington, D.C., his/her successors and assigns." If the original note cannot be located, the lender should submit a lost note affidavit.

Submitting Title Evidence Package and Servicing Records

Be sure to include a transmittal letter identifying a contact individual's name and telephone number if HUD needs more information when submitting claims, title evidence or servicing records. Guidance is available from these sources:

	Consult HUD Handbook 4330.4, Rev-1, FHA Single Family Insurance Claims, for claim filing instructions.
	Call Scott Riley, Management Analyst, in HUD's National Servicing Center at (405) 609-8478 if you are a lender or servicer with questions about submitting servicing records.
	Contact Susan Lee, Chief Counsel, Honolulu Field Office, at (808) 522-8179, ext. 258 if you have questions about the title evidence required by HUD.

At the same time the lender files form HUD-27011, Parts A, B and D, a request for title approval needs to be submitted with the title evidence package to:

Chief Counsel, Honolulu Office
U.S. Department of Housing and Urban Development
1132 Bishop Street, 14th Floor
Honolulu, HI 96813

The title evidence package must contain these key documents for title approval:

1. Original Note endorsed to HUD in the format required by HUD-27011 A;
2. Original Mortgage, with evidence of recordation by DHHL;
3. Recorded Consent to Mortgage signed by DHHL;
4. Recorded intervening assignments of mortgage, if any;
5. Recorded Assignment of Mortgage (AOM) to HUD with required warranty;
6. Copy of mortgagor's Homestead Lease and recorded lease assignments and amendments, if any; and
7. Recorded Mortgage Insurance Program Rider to the Homestead Lease.

In addition to the title documents noted above, the following servicing records should also be submitted:

1. Copies of HUD-27011-A, B and D;
2. Copy of Title Submission Certification;
3. Proof of request to endorse fire policy;
4. Loan history commencing from date of first payment;
5. Copy of signed management review checklist plus all supporting servicing records;
6. Initial DHHL notification letter; and
7. Evidence of loss mitigation efforts.

Upon satisfactory review of the above noted documents, the Honolulu Field Office Counsel will issue a title approval letter to the submitting lender and prepares, for execution by an authorized official of the National Servicing Center (NSC), the conveyance documents to transfer the loan from HUD to DHHL. NSC assures that the AOM from HUD to DHHL is recorded and retains records of the Assignment.

Reconveyance to Lender

If HUD does not accept assignment of the mortgage and note, the loan will be reassigned to the lender and a request for repayment of the claim amount will be made. Alternatively, if the claim has yet to be paid, the documents submitted will be returned to the lender.