HUD recently announced updates to its Single Family Housing Handbook 4000.1 that will become effective on November 30, 2019. Proctor would like to draw attention to the following revisions pertaining to the administration of hazard insurance:
- If the Mortgagee requires the Borrower to purchase Hazard Insurance, the Mortgagee must allow Borrowers to choose their own hazard insurance company;
- When the Mortgagee requires the Borrower to purchase Hazard Insurance, the Mortgagee must now escrow for premium payments and pay renewal premiums by either remitting the renewal payment from available escrow funds or by advancing escrow funds as needed for the payment of the renewal premium.
- Previously, Mortgagees were limited to paying the renewal premium at the time it was due and were only permitted to advance escrow funds until such a time when the borrower had sufficient funds to pay, if the borrower was required to pay the premiums, and had failed to do so.
These future updates will be incorporated into the HUD Single Family Housing Policy Handbook 4000.1. For complete details, please review the redlined version of the handbook, Section III.A.1.h.i.
Proctor will continue to monitor this topic and provide updates as they occur.