HUD ML 2013-32 Update to FHA Loss Mitigation Home Rentention

On September 20, the U.S. Department of Housing and Urban Development (HUD) published Mortgagee Letter 2013-32, subtitled Update to FHA’s Loss Mitigation Home Retention Options.

Mortgagee Letter 2013-32
To: All Approved Mortgagees

Subject: Update to FHA’s Loss Mitigation Home Retention Options

This Mortgagee Letter supersedes Mortgagee Letter 2012-22, Revisions to
FHA’s Loss Mitigation Options
, published on November 16, 2012. Also, this
Mortgagee Letter addresses treatment of “continuous income” 1 from sources
other than wages for mortgagors in need of loss mitigation assistance. This
Mortgagee Letter is intended to help reduce the number of full claims against
FHA’s Mutual Mortgage Insurance Fund by assisting a greater number of
distressed mortgagors in retaining their homes; thus, Mortgagee Letter 2012-22
will remain effect until servicers are able to fully implement this Mortgagee

Effective Date: Mortgagees must implement the policies set forth in this Mortgagee
Letter no later than December 1, 2013.

Policy Updates: This Mortgagee Letter includes guidance on:

  • Defining “continuous income,” other than wages, for Loss Mitigation
  • Conditions required for a “Special Forbearance” to be used as a loss
    mitigation tool;
  • Capitalization of arrearages for Modifications and Partial Claims;
  • Working with mortgagors in bankruptcy;
  • Defining “Market Rate” (introduced by Mortgagee Letter 2013-17); and
  • Frequently Asked Questions (FAQs), communicated in Attachment 1 of
    Mortgagee Letter 2013-03.

Background on FHA’s Loss Mitigation Program: FHA’s Loss Mitigation Program
was established in 1996 to ensure that distressed FHA mortgagors were afforded
opportunities to retain their homes and to assist in minimizing losses to FHA’s
Mutual Mortgage Insurance Fund.

To view the online Mortgagee Letter, please click here.

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website:


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