Aug 10, 2018 18-12
URGENT - New closing document - HUD Second Mortgage Rider
HUD Second Mortgage Rider Requirement – to be executed with MFA loans reserved on August 10, 2018 or after!
PLEASE FORWARD THIS MEMORANDUM TO THE APPROPRIATE PERSONNEL WITHIN YOUR ORGANIZATION.
MFA worked closely with HUD to create a custom Second Mortgage Rider (“Rider”) which must be signed by borrowers and recorded along with MFA second mortgages in cases where a down payment assistance (DPA) loan is combined with a first mortgage loan that is insured by FHA. The Rider does not apply to DPA funded through an MFA grant.
The Rider contains the required language that clarifies the disposition of the second mortgage in the event of a default, subsequent foreclosure and FHA claim as required by 24 CFR §203.41 (4000.1 Handbook pg. 341 (rev. 12-30-17).
Effective with Reservations dated August 10, 2018 or after, upon Compliance Approval, the Rider now automatically appears on the list of documents available to print within MFA’s On-line Reservation System. Lenders must print the form and have it signed at closing and recorded with the Second Mortgage. The original recorded Rider must be included with the final follow up documents mailed to MFA along with the original recorded second mortgage.
Following is the language contained in the Rider:
“Any restrictions on conveyance in any loan document or mortgage will automatically terminate if title to the mortgaged property is transferred by foreclosure or deed in lieu of foreclosure, or if the mortgage is assigned to the Secretary of HUD.
Notwithstanding the termination of any restrictions on conveyance as provided in this Rider, the Mortgage shall otherwise remain in full force and effect.”
Thank you for participating in MFA’s programs. Should you have any questions, please contact your MFA Homeownership Representative directly or the office at 505-843-6880.