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Implement a change to regulations at 24 CFR Part 203 to require curtailment of preforeclosure interest and other costs that are caused by lender servicing delays, resulting in $413,513,975 in funds to be put to better use. This should include updating or seeking statutory authority to update HUD’s regulations as necessary and coordinating with HUD’s Office of Finance and Budget, well before any changes go through departmental clearance, to ensure that planned curtailment requirements can be consistently enforced through the claims process.


Status

FHA reported that the audit recommendation cannot be closed without the publication of the FHA Maximum Claim Rule. The proposed changes have been on HUD’s regulatory agenda since Spring 2020 but, as of November 2024, the Office of Single Family Housing does not have an estimated publication date.


Analysis

To fully address this recommendation, HUD must provide evidence that it has published and adopted the rule.

Implementation of this rule should result in HUD putting $413 million to better use.

Publication Report

2018-LA-0007 | September 27, 2018

HUD Paid an Estimated $413 Million for Unnecessary Preforeclosure Claim Interest and Other Costs Due to Lender Servicing Delays

We audited the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration’s (FHA) preforeclosure sale claim process based on an internal Office of Inspector General audit suggestion noting that existing regulations may allow… more