MBA, Trade Groups Give HUD Feedback on CWCOT Program

The Mortgage Bankers Association, the Housing Policy Council and the National Mortgage Servicing Association submitted joint comments to HUD on its proposed enhancements to its Claims Without Conveyance of Title (CWCOT) Program).

The letter comes in response to a HUD draft Mortgagee Letter that proposes to enhance FHA’s CWCOT procedures (, effective for all foreclosure sales associated with defaulted FHA-insured mortgages. Specifically, the proposed enhancements to FHA’s CWCOT procedures would:

–Provide for a second appraisal upon vacancy for a property that had an exterior only appraisal, where an interior appraisal could not be obtained;

–Permit Mortgagees to submit eviction costs and certain eligible property preservation expenses incurred during additional sales opportunities;

–Update the policy and allowable fee structure regarding independent third-party providers that conduct foreclosure sale or additional Post-Foreclosure Sales Efforts under CWCOT procedures; and

–Regularly update discounts in FHA Connection and changing to tier-based pricing factors.

The letter commends FHA for its efforts to expand the CWCOT program. “Successful CWCOT sales (either at foreclosure sale or second chance sales) result in significantly lower losses to the FHA insurance fund when compared to Conveyance,” it said. “A more efficient and effective CWCOT program results in getting impacted properties quickly back into the normal fabric of our nation’s neighborhoods and communities.”

The letter offers suggestions for clarifications; in particular, the letter asks clarification regarding the amount of time provided and the relationship to mortgagee compliance with all foreclosure timelines. “We want to ensure that the Mortgagee Letter achieves the goal of increasing overall CWCOT sale rates,” it said. 

The letter notes currently, HUD will approve two consecutive 60-day extensions to the conveyance timeframe. The conveyance timeframe is 30 days from the later of 1) Filing for record the foreclosure deed; 2) Recording date of deed in lieu of foreclosure; 3) Acquiring possession of the property; 4) Expiration of the redemption period; or 5) Such further time as the Secretary may approve in writing.

MBA and the trade groups said the draft Mortgagee Letter language appears to start the 60 days from only one prong of the conveyance timeframe. “We would ask that this 60-day timeframe be provided for all the scenarios noted above,” the letter said. “Moreover, we assume that this 60-day timeframe is in addition to the 30-day conveyance timeframe. We appreciate the automatic 30-Day extension to this deadline if ‘an acceptable sales contract has been ratified before the expiration of the 60-Day period.’ We assume that HUD will grant additional extensions upon request based on a case-by-case review. HUD currently provides servicers with two 60-day extensions upon request, and we assume HUD would provide continued consideration for operational challenges. We ask that HUD confirm these assumptions.”

Additionally, the letter notes currently, extensions of time for second chance sales are not conditioned on mortgagee compliance with all foreclosure timelines. “After all, penalties to mortgagees are already in place for missing these timelines,” the letter said. “We seek clarification that mortgagees are still afforded the same extensions of time in cases where foreclosure deadlines are missed.”