24 C.F.R. § 206.107

Mortgagee election of assignment or shared premium option

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(a) Election of option. Before the mortgage is submitted for insurance endorsement, the mortgagee shall elect either the assignment option or the shared premium option.

(1) Under the assignment option, the mortgagee shall have the option of assigning the mortgage to the Commissioner if the outstanding loan balance is equal to or greater than 98 percent of the maximum claim amount, regardless of the deferral status, or the borrower has requested a payment which exceeds the difference between the maximum claim amount and the outstanding loan balance and:

(i) The mortgagee is current in making the required payments under the mortgage to the borrower;

(ii) The mortgagee is current in its payment of the MIP (and late charges and interest on the MIP, if any) to the Commissioner;

(iii) The mortgage is not due and payable under § 206.27(c)(1), or, if due and payable under § 206.27(c)(1), its due and payable status has been deferred pursuant to a Deferral Period;

(iv) An event described in § 206.27(c)(2) has not occurred, or the Commissioner has been so informed but has denied approval for the mortgage to be due and payable. At the mortgagee's option, the mortgagee may forgo assignment of the mortgage and file a claim under any of the circumstances described in § 206.123(a)(3)-(5); and

(v) The mortgage is a first lien of record and title to the property securing the mortgage is good and marketable. The provisions of § 206.136 pertaining to mortgagee certifications also apply.

(2) Under the shared premium option, the mortgagee may not assign a mortgage to the Commissioner unless the mortgagee fails to make payments and the Commissioner demands assignment (§ 206.123(a)(2)), but the mortgagee shall only be required to remit a reduced monthly MIP to the Commissioner. The mortgagee shall collect from the borrower the full amount of the monthly MIP provided in § 206.105(b) but shall retain a portion of the monthly MIP paid by the borrower as compensation for the default risk assumed by the mortgagee. The portion of the MIP to be retained by a mortgagee shall be determined by the Commissioner as calculated in § 206.109. For a particular mortgage, the applicable portion shall be determined as of the date of the commitment. The mortgagee retains the right to file a claim under any of the circumstances described in § 206.123(a)(2)-(5).

(b) No election for shared appreciation. Shared appreciation mortgages shall be insured by the Commissioner only under the shared premium option.

Notes of Decisions

Cited in 5 cases (2 in the last 5 years), 2014–2025 · leading case: Reverse Mortg. Solutions v. U.S. Dept. Of Hous., 365 F. Supp. 3d 931 (E.D. Ill. 2019).

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Reverse Mortg. Solutions v. U.S. Dept. Of Hous., 365 F. Supp. 3d 931 (E.D. Ill. 2019). “See 24 C.F.R. § 206.107 (a). If the lender makes that election, HUD takes on responsibility for servicing the loan until a trigger event occurs; when such an event occurs HUD may foreclose the home if necessary.”

Plunkett v. Donovan, 67 F. Supp. 3d 1 (D.D.C. 2014). “See 24 C.F.R. § 206.107 (a). If the lender makes this election, HUD takes on full responsibility for servicing the loan until a trigger event occurs and, when such an event occurs, HUD may foreclose the home if necessary.”

McKaughan v. Wells Fargo Bank NA (D.S.C. 2025). “24 C.F.R. § 206.107 (a). [Ms. McKaughan] and have her acknowledge she received the statutorily required statement of seeking independent counsel on real estate transactions.”

Philadelphia Cmty. Dev. Coalition, Inc. v. Wells (E.D. Pa. 2025). “24 C.F.R. § 206.107 . At the time of assignment, HUD pays a claim for insurance benefits from the Mutual Mortgage Insurance Fund to the private lender.”

Plunkett v. Donovan, 307 F.R.D. 47 (D.D.C. 2014). “) Plaintiffs assert that this language is inconsistent with 24 C.F.R. § 206.107 (a)(1), which gives mortgagees “the option of assigning the mortgage to the Secretary if the mortgage balance is equal to or greater than 98 percent of the maximum claim amount.”

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