HUD requires the audit system to review mortgage loan files at least monthly to evaluate the loan servicing functions having to do with default servicing. The review must determine, at a minimum, whether the following requirements have been met:

 

Collection activities. Effective collection activities are pursued in a timely fashion and contact with all co-borrowers, co-signors and former mortgagors, is attempted as appropriate.

 

Collection documentation. Accurate documentation of collection efforts is maintained, including referral of the borrower to a HUD-approved counseling agency and timely mailing of HUD pamphlet HUD-426 to the borrower.

 

Interview with borrower. A personalized interview, face-to-face or telephone, with the borrower is attempted before three full mortgage installments become delinquent.

 

Default monitoring. Accurate and timely reports are submitted to the FHA single family default monitoring system.

 

Credit bureau reporting. Borrower information is reported to credit reporting agencies when appropriate.

 

Property inspections. Inspections to protect and preserve the mortgaged property are performed in accordance with HUD requirements.

 

Loss mitigation. All appropriate loss mitigation tools are considered and documented and borrowers are provided every reasonable opportunity to remedy a delinquency or default prior to the decision to foreclose.

 

Forbearance. Additional assistance to remedy the delinquency is reasonable given the financial data submitted by the borrower and reasonable partial payments are accepted in accordance with FHA requirements.

 

Foreclosure. Foreclosure proceedings are initiated and completed in a timely manner in compliance with HUD requirements.

 

Disaster servicing. FHA disaster moratorium requirements are met.

 

Deficiency judgments. Deficiency judgments are taken where required.

 

Claims. Sufficient controls are in place to ensure that claims for insurance benefits are accurately prepared, properly calculated, fully supported and submitted in a timely manner to HUD.