FHA issued Mortgagee Letter (ML) 2026-03, updating requirements for the foreclosure and post-foreclosure processes. The ML updates the requirements for bidding at a foreclosure sale and for utilizing Claims Without Conveyance of Title (CWCOT), including post-foreclosure sales efforts by HUD reaffirming a policy that a mortgagee may only participate in the CWCOT program if the mortgagee bids the Commissioner’s Adjusted Fair Market Value (CAFMV) at the foreclosure sale. A mortgagee that bids below the CAFMV at a foreclosure sale must either convey the property to HUD or forgo filing a claim. HUD is also eliminating the exemption for small servicers because they can convey the property to HUD instead, if they are unable to meet the CAMFV bidding requirement.
The provisions of this ML may be implemented immediately but must be implemented for foreclosure sales scheduled on or after April 29, 2026.
Click to view the FHA Mortgagee Letter 2026-03: https://www.tenaco.com/wp-content/uploads/2026/02/FHA-Mortgagee-Letter-2026-03-01-29-26.pdf
