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#2279537 - 01/06/23 04:32 PM HMDA Purpose Re: Paying Off HUD Partial Claim
Mountaineers_Fan Offline
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Joined: Jun 2018
Posts: 100
We have a HELOC where the title search came back with a subordinate lien of a partial claim placed by HUD. I did some research and it appears partial claims "allow mortgage payment arrearages to be placed in a zero-interest subordinate lien against the property. The partial claim amount does not require payment until the last mortgage payment is made, the loan is refinanced, or the property is sold, whichever occurs first".

We've now had two of these partial claim situations which seem to be a result of COVID relief for FHA loans.

The partial claim was paid off with the HELOC loan proceeds and the other funds were used for home improvement.

Anyone have experience with these? Would the satisfying and replacing of this lien be treated the same way as any other dwelling secured lien for purposes of HMDA?

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#2279541 - 01/06/23 05:40 PM Re: HMDA Purpose Re: Paying Off HUD Partial Claim Mountaineers_Fan
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,152
Bloomington, IN
The satisfaction of a lien is not a consideration for determining if the new loan is a covered transaction.

I'm not familiar with these "partial claims" so I can't give you an opinion but you have to determine if the HUD lien rises to the definition of a dwelling secured debt obligation or has HUD simply filed a lien to protect themselves for the payment arrearages?
The opinions expressed are mine and they are not to be taken as legal advice.

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