RHS issued a SFH Guaranteed Servicing Notice (Notice) issuing guidance on foreclosures impacted by the 8th Circuit ruling in “Show Me State Premium Homes v. McDonnell (July 2023)” (which impacts federal liens after the foreclosure sale). RHS issued the guidance as the USDA Mortgage Recovery Advance (MRA) is a federal lien. The guidance relates to Section 18.11 (Managing the Foreclosure Process) of the Handbook. Per the Notice:
- When available, servicers should use the less expensive non-judicial foreclosure method.;
- If there are no excess funds available after the foreclosure sale that could be applied to the MRA, the servicer should prepare the lien release documents based on any requirements of the jurisdiction and send them to USDA for review and execution; and
- If there are excess funds available after the foreclosure sale that could be applied to the MRA, the funds should be applied to the MRA until the funds have been exhausted. The servicer should then prepare the lien release documents based on any requirements of the jurisdiction and send them to USDA for review and execution.
The Notice was effective July 3, 2024.
Click to view the RHS SFH Guaranteed Servicing Notice: https://www.tenaco.com/wp-content/uploads/2024/07/RHS-SFH-Guaranteed-Servicing-Notice-07-03-24.pdf
