FHA Single Family Housing Policy Handbook 4000.1, Part III — c. Hawaiian Home Lands Mortgages (Section 247 Mortgages) (10/01/2025)

FHA Single Family Housing Policy Handbook 4000.1, Part III — c. Hawaiian Home Lands Mortgages (Section 247 Mortgages) (10/01/2025)

c. Hawaiian Home Lands Mortgages (Section 247 Mortgages) (10/01/2025) i. Reporting of Delinquent Mortgages (A) Standard The Mortgagee must report in Single Family Default Monitoring System (SFDMS) the Delinquency/Default Status Codes that accurately reflect the stage of delinquency or mortgagee action. In addition, the Mortgagee must notify the State of Hawaii Department of Hawaiian Home Lands (DHHL) each month of: • which Section 247 insured Mortgages on Leaseholds of Hawaiian Home Lands are 30 or more Days Delinquent on the last Day of the month; and • the status of Mortgages that were reported as Delinquent the previous month. (B) Contact Information for Submission of Reports The Mortgagee must complete its Default reporting in SFDMS to meet its DHHL reporting requirements. (C) HUD’s Loss Mitigation Program The Mortgagee may offer the following Loss Mitigation Options to eligible Borrowers with Section 247 Mortgages: • Repayment Plans; • Forbearance; • Standalone Loan Modification; and • Outside of the Waterfall Loan Modification (OWL). Due to Hawaii state law prohibitions on the placement of junior liens on Properties secured by Section 247 Mortgages, the Mortgagee must not use Partial Claims with Section 247 Mortgages. ii. Section 247 Assignments (A) Standard The Mortgagee may assign the Delinquent insured Mortgage and Note to HUD if all of the following conditions are met: • the Mortgage has been in Default for 180 Days or more; • when the Mortgage is 90 Days Delinquent, the Mortgagee has notified DHHL of the Default in writing; • the Mortgagee has conducted or made a reasonable effort to arrange the Interview at least 30 Days before the application for assignment is submitted, unless exempt; and III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 3. Programs and Products - Hawaiian Home Lands Mortgages (Section 247 Mortgages) (10/01/2025) Handbook 4000.1 1349 Last Revised: 11/26/2025 • the Mortgagee has evaluated the Borrower for loss mitigation in accordance with HUD guidance. The Mortgagee must not foreclose on or approve a Pre-Foreclosure Sale (PFS) or Deed-in-Lieu (DIL) transaction on Section 247 Mortgages; the only disposition option available to the Mortgagee is assignment. (B) Endorsement on Original Note To assign the Note to HUD, an authorized agent of the Mortgagee must sign 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., their successors and assigns.” (C) Lost Note Affidavit If the original Note cannot be located, the Mortgagee must submit the Lost Note Affidavit. iii. Submission of Title Evidence Package and Servicing Records for Assignment (A) Standard Prior to filing Hawaiian Home Lands Mortgages (Section 247 Mortgages) Claims for insurance benefits, the Mortgagee must submit the title evidence package and servicing records to HUD for approval. (1) Title Evidence Package The Mortgagee must: • mail the original Note endorsed to HUD in the format required by form HUD-27011, Single Family Application for Insurance Benefits, Part A, to HUD at: Attn: Section 247 Assignment Oklahoma City Field Office U.S. Department of HUD 301 NW 6th Street, Suite 200 Oklahoma City, OK 73102; and • upload the following into P260: • digital copy of the Note showing the most current endorsement to HUD; • Transmittal Letter, indicating the name and telephone number of the person HUD is to contact for more information about the submission; • Mortgage with evidence of recordation by DHHL; • recorded Consent to Mortgage signed by DHHL; III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 3. Programs and Products - Hawaiian Home Lands Mortgages (Section 247 Mortgages) (10/01/2025) Handbook 4000.1 1350 Last Revised: 11/26/2025 • recorded intervening assignments of Mortgage, if any; • recorded Assignment of Mortgage (AOM) to HUD with required warranty; • copy of Borrower’s Homestead Lease and recorded Lease Assignments and Amendments, if any; and • recorded Mortgage Insurance Program Rider to the Homestead Lease. (2) Servicing Records The Mortgagee must upload the following into P260: • copy of form HUD-27011; • copy of Title Submission Certification; • proof of request to endorse fire policy; • mortgage history commencing from date of first payment; • copy of signed Management Review Checklist, plus all supporting servicing records; • initial DHHL notification letter; and • evidence of loss mitigation efforts. (B) HUD Review After receiving the original Note and reviewing the title documents and servicing records, HUD will either: • issue an assignment acceptance letter to the submitting Mortgagee through P260; or • reject the submission in P260 and: o if the title documents contain deficiencies, HUD will provide the Mortgagee 30 Days to cure such deficiencies; or o if the servicing records contain deficiencies, HUD will provide the Mortgagee with an explanation for rejection, as applicable. The Mortgagee may appeal the rejection in P260. iv. Reconveyance to Mortgagee If the claim has been paid and HUD does not accept assignment of the Mortgage and Note, HUD will: • reassign the Mortgage to the Mortgagee; • reject the submission in P260; and • request repayment of the claim amount. If the claim has not yet been paid and HUD does not accept assignment of the Mortgage and Note, HUD will return the submitted original documents to the Mortgagee. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages

Source: FHA Single Family Housing Policy Handbook 4000.1, Part III — c. Hawaiian Home Lands Mortgages (Section 247 Mortgages) (10/01/2025) · source URL · snapshot 8c03836f77f317e1