When a Borrower files bankruptcy after foreclosure proceedings have been initiated, an automatic extension for foreclosure and acquisition of the Property will be allowed as long as:

• the Mortgagee ensures that all necessary bankruptcy-related legal actions are handled in a timely and effective matter;
• the case is promptly referred to a bankruptcy attorney after the bankruptcy is filed; and
• the Mortgagee monitors the action to ensure that the case is timely resolved through dismissal, termination of the automatic stay, or trustee abandonment of all interest in the secured Property.  

HUD will reimburse legal expenses related to resolving bankruptcies in accordance with HUD’s Schedule of Standard Attorney Fees in Appendix 4.0 of Handbook 4000.1.

The timeframe for completing the bankruptcy action will vary based on the chapter under which the bankruptcy is filed.

Chapter 7 Bankruptcy
HUD allows the Mortgagee an additional 90 Days from the date of the release of stay of the Chapter 7 bankruptcy to recommence the foreclosure.  Note: No delay is necessary and lifting of the automatic stay is not required where the subject property is surrendered by the Debtor, as provided in the Notice of Intent received by the Mortgagee from the Bankruptcy Court.

Chapter 11, 12, or 13 Bankruptcy
When the Mortgagee cannot proceed with foreclosure action because of a Chapter 13 (or Chapter 11 or 12) bankruptcy, the Mortgagee must closely monitor the payments required by the bankruptcy court.  If the Borrower becomes 60 Days delinquent in payments required under a Chapter 13 (or Chapter 11 or 12) plan, the Mortgagee must ensure that prompt legal action is taken to resolve the matter.
Any delay the Mortgagee encounters must be fully documented and must be beyond the Mortgagee’s control.

The Mortgagee must document in its Claim Review File any delay in completing foreclosure and all activities performed by the Mortgagee to mitigate and abide by these timeframes. The Mortgagee must maintain a comprehensive audit trail and chronology to support any delay in compliance with the Reasonable Diligence Time Frames.
Where the Mortgagee has submitted a request for an extension of time to the National Servicing Center (NSC) via the Extension and Variances Automated Request System (EVARS), the Mortgagee must maintain a copy of the NSC’s written response in the Claim Review File.
For automatic extensions, the Mortgagee must reflect these extensions in form HUD-27011 and retain in the Claim Review File documentation supporting those extensions.

Any questions may be directed to the FHA Resource Center Toll-Free Telephone Number at (800) CALLFHA (225-5342) or by email to [email protected].  Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at (800) 877-8339. 

Technical support on Extensions and Variances Automated Requests System (EVARS) and E-Class at:  [email protected]
Toll-Free Number:  1-888-647-5893   For Speech and Hearing Impaired (TeleTypewriter): 1-801-741-1437

For policy information see Handbook 4000.1 III.A.2.r.ii(E)(2)(d) and III.A.2.r.ii(E)(3) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh