On September 23, 2009, HUD published Mortgagee Letter 2009-35. The purpose of the Mortgagee Letter is to update the conditions under which FHA will pay loss mitigation claims for modifications of loans where the current note rate is 50 basis points or more over the current market rate as defined herein. To qualify for the incentive payment and allowable costs on such cases, the modified loan must meet the term and interest rate requirements prescribed in this Mortgagee Letter. These requirements are effective October 23, 2009.
