Filing HUD Form 27011 is how an FHA-approved mortgagee asks the federal government to pay an insurance claim after a single-family loan defaults, and the form must be completed inside HUD’s Single Family Claims system in FHA Connection under the rules in Handbook 4000.1, Section V. The form has five parts (A, B, C, D, E), each tied to a different claim type and a different stage of the claim life cycle.
Mistakes on this one form cost lenders hundreds of millions of dollars every year. According to the HUD Office of Inspector General, curtailments, denials, and False Claims Act settlements tied to defective Form 27011 filings have exceeded $5 billion since 2012, including the $1.2 billion Wells Fargo settlement and the $32.5 million Rocket Mortgage agreement.
Here is what you will learn:
- 📋 How to complete every line of HUD Form 27011 Parts A through E without triggering a curtailment
- ⏱️ The exact deadlines under 24 CFR § 203.355 for first legal action, reasonable diligence, and claim submission
- 💰 How to calculate debenture interest, allowable expenses, and the HUD debenture interest rate without overstating the claim
- ⚖️ The False Claims Act and FIRREA exposure that flows from misstatements on the form
- 🛡️ The seven costliest mistakes servicers make, plus do’s, don’ts, pros, cons, and ten plain-English FAQs
What HUD Form 27011 Really Is
HUD Form 27011, titled Single Family Application for Insurance Benefits, is the official claim form a mortgagee submits to the Federal Housing Administration to collect FHA mortgage insurance proceeds after a borrower defaults. The form is authorized by Section 204 of the National Housing Act and implemented through 24 CFR Part 203, Subpart B. HUD uses the data on this form to pay insurance benefits in cash, in debentures, or in a combination of both.
The plain-English purpose is simple. When a borrower stops paying an FHA-insured mortgage and the loan ends in foreclosure, deed-in-lieu, short sale, or assignment, the lender loses money. Form 27011 tells HUD how much money the lender lost and how much HUD must reimburse under the insurance contract.
The consequence of skipping or mis-filing the form is severe. If a mortgagee misses a deadline, HUD curtails interest and expenses back to the missed milestone. If a mortgagee falsifies a line, the False Claims Act imposes treble damages plus per-claim penalties that exceeded $27,894 in 2024 under 28 CFR § 85.5.
A real-world example shows the stakes. Servicer ABC forecloses on a 203(b) loan in Texas, conveys the property to HUD, and files Form 27011 ninety days late. HUD pays the unpaid principal balance but curtails all interest after the reasonable diligence deadline, costing ABC about $14,000 on a single file.
A common misconception is that Form 27011 is one document. It is actually a family of related forms (A, B, C, D, E) plus required attachments, all filed inside FHA Connection using the P260 claims module or an EDI submission.
Who Files the Form
Only an FHA-approved mortgagee of record may file HUD Form 27011. The mortgagee can be a bank, a credit union, a non-bank servicer, or a sub-servicer acting under a Subservicing Agreement recognized by HUD. The lender’s 10-digit FHA Mortgagee ID must match the holder of record at the time of default.
The consequence of filing under the wrong mortgagee ID is automatic rejection inside FHA Connection. HUD also rejects claims where the MERS chain shows an unrecorded assignment that breaks the mortgagee’s authority to foreclose.
A common misconception is that originating lenders can file. They cannot, unless they still hold servicing. A named example: when Servicer XYZ transferred a portfolio to Servicer DEF on March 1, only DEF can file Form 27011 for any default that exists on March 2 or later, because DEF is the mortgagee of record.
When the Form Is Required
The form is required any time a mortgagee seeks payment under the FHA insurance contract. That includes conveyance claims, Claims Without Conveyance of Title (CWCOT), Pre-Foreclosure Sales (PFS/short sales), deeds-in-lieu, and assignments to HUD under 24 CFR § 203.350.
The consequence of missing the filing window is a bar to the entire claim. Under 24 CFR § 203.473, the claim must be filed within 45 days after conveyance for Part A, and within six months of the eligible event for supplemental Parts C and D.
A common misconception is that HUD will accept “late but reasonable” filings. HUD will not, absent a documented Extension of Time granted in FHA Connection before the deadline expires.
The Five Parts of HUD Form 27011
HUD Form 27011 is split into Part A, Part B, Part C, Part D, and Part E. Each part has its own purpose, its own data fields, and its own deadline. Filing the wrong part for the wrong claim type is one of the top three reasons HUD denies claims, according to the FHA Single Family Loan Performance Trends reports.
The five parts share a few common fields at the top: FHA Case Number, Mortgagee ID, Borrower Name, Property Address, and Type of Claim. These header fields must match the data in FHA Connection exactly, character for character, or the system rejects the submission.
A real-world example: Servicer Gamma typed “1234 Main St” on the form but FHA Connection stored “1234 MAIN STREET.” The claim sat in suspense for 38 days, and Gamma lost $1,900 in curtailed interest before the address mismatch was corrected.
Part A: Initial Application for Insurance Benefits
Part A is the initial claim filed within 45 days of conveyance for conveyance claims, within 60 days of the foreclosure sale for CWCOT, or within 60 days of the closing date for Pre-Foreclosure Sales. Part A captures unpaid principal balance (UPB), the date of default, the due date of the last paid installment, and the type of claim being submitted.
The plain-English explanation is that Part A is the “headline” of the claim. It tells HUD what happened and when. The consequence of an error here is a global curtailment that flows into every dollar paid on Parts B and D.
A named example: Servicer Delta lists the date of default as April 15, 2025 on Part A, but the loan history shows the last full payment applied through March 1, 2025, meaning default actually began April 2. HUD curtails 13 days of interest because the reasonable diligence clock started earlier than Delta claimed.
A common misconception is that “date of default” equals the date the loan went 90 days past due. It does not. Per Handbook 4000.1 III.A.2.h, default is the first day after the due date of the last paid installment.
Part B: Fiscal Data
Part B itemizes every dollar the mortgagee paid that HUD will reimburse. That includes the UPB, accrued interest from default to claim filing, foreclosure costs, attorney fees subject to the Attorney Fee Schedule, property preservation expenses under Mortgagee Letter 2023-10, and tax and insurance advances.
The consequence of overstating Part B is dollar-for-dollar denial plus potential False Claims Act exposure if the overstatement is reckless. The consequence of understating Part B is a permanent loss because HUD does not re-open paid claims to add forgotten expenses outside the supplemental window.
A named example: Servicer Epsilon claims $4,200 in property preservation on a Cleveland REO. Of that, $1,100 covers a snow-removal service that exceeded the local HUD P&P allowable. HUD pays $3,100 and denies $1,100.
A common misconception is that any reasonable expense is reimbursable. Only expenses listed in Handbook 4000.1 Appendix 5.0 and at or below the local HUD allowable are paid.
Part C: Supplemental Claim for Conveyance and CWCOT
Part C captures additional expenses approved after Part A but tied to the conveyance or CWCOT event, such as eviction costs, late-discovered property tax bills, and over-allowable preservation expenses approved by the Field Service Manager. Part C must be filed within six months of the Part A payment date.
The consequence of missing the Part C window is total denial of the supplemental amount. The consequence of using Part C for items that belonged on Part A is the same total denial, because HUD treats it as a late Part A line item.
A named example: Servicer Zeta discovers a $3,800 supplemental tax bill 45 days after Part A pays. Zeta files Part C inside the six-month window, attaches the tax authority’s statement, and HUD reimburses in full.
A common misconception is that Part C can be filed multiple times. HUD permits only one Part C per claim under Handbook 4000.1 V.B.4.
Part D: Supplemental Claim for Assignment, PFS, and Special Programs
Part D is the supplemental claim for non-conveyance scenarios, including assignment claims under 24 CFR § 203.350, HUD Partial Claims executed during loss mitigation, and Pre-Foreclosure Sales. Part D mirrors Part B in structure but is tailored to the unique cost categories of each program.
The consequence of using the wrong claim-type code in Part D is automatic rejection by FHA Connection’s edit checks. The consequence of mixing PFS expenses with assignment expenses on a single Part D is a multi-week suspension while HUD reconciles the figures.
A named example: Servicer Theta files a Part D PFS claim and includes the buyer’s $1,500 closing cost credit. Because the PFS program caps seller-paid buyer closing costs at 1 percent of sales price, HUD pays only the portion within the cap.
A common misconception is that Part D and Part C are interchangeable. They are not. Each one ties to specific claim-type codes listed in Mortgagee Letter 2022-18.
Part E: Pre-Foreclosure Sale Application
Part E is reserved for the initial PFS claim and reports the approved sales price, closing date, net proceeds, and the variance between the appraised value and the as-sold value. Part E must be filed within 60 days of the PFS closing.
The consequence of filing Part A instead of Part E on a PFS file is a full rejection. The consequence of missing the 60-day window is the loss of the entire claim because PFS files do not convey to HUD, leaving the mortgagee with the property and no insurance recovery.
A named example: Servicer Iota closes a PFS on July 10, files Part E on August 1, and receives full insurance benefits on August 14. By contrast, Servicer Kappa closes on July 10, files Part E on September 20, and HUD denies the entire $42,000 claim.
A common misconception is that the PFS Approval to Participate (ATP) extends the claim filing deadline. The ATP only authorizes the sale; the 60-day claim clock still starts at closing.
Line-By-Line Walkthrough With Examples
This section walks every meaningful line on HUD Form 27011 and explains the field, the consequence of an error, an example, and a common misconception. Use this as a desk reference while drafting the claim inside FHA Connection.
The form pulls many fields from the Single Family Default Monitoring System (SFDMS). If SFDMS shows a different status than the form, HUD’s edit checks block submission. Always reconcile SFDMS before opening the claim.
A real-world example: Servicer Lambda’s SFDMS shows status “42 – Deed-in-Lieu Completed” but Part A is coded as a conveyance after foreclosure. The system rejects the claim until Lambda corrects SFDMS to status “44 – Conveyed to Insurer.”
Header Block: Case, Mortgagee, and Property
The header captures the 10-digit FHA Case Number, the 10-digit Mortgagee ID and Sub-ID, the property address, and the borrower’s full legal name. Every digit must match FHA Connection and the recorded deed of trust.
The plain-English explanation is that the header is the “fingerprint” that links the claim to the insured loan. The consequence of a typo is a suspended claim and curtailed interest while you fix it. The misconception that “minor typos auto-correct” is wrong; FHA Connection performs exact-match edits.
A named example: Borrower Maria Hernandez appears as “Maria H. Hernandez” on the form but “Maria Hernandez” in FHA Connection. The middle initial mismatch triggers a manual review and delays payment by 22 days.
Date of Default and Due Date of Last Paid Installment
Both dates anchor the curtailment clock under 24 CFR § 203.402. The date of default is the day after the due date of the last paid installment.
The consequence of misstating either date is automatic interest curtailment. A common misconception is that partial payments reset the default date; under Handbook 4000.1 III.A.2.h, only a full monthly installment resets the clock.
A named example: Borrower James Carter paid $500 on a $1,200 P&I installment due February 1. Because $500 is not a full installment, the date of default remains February 2, not March 2.
Unpaid Principal Balance (UPB)
UPB is the principal balance on the date of default, not the date of foreclosure sale. HUD pays interest on the UPB from the date of default to the date of claim submission, capped by curtailment dates.
The consequence of using the foreclosure-sale-date UPB is overstatement, which triggers denial and potential FCA exposure. A common misconception is that escrow balances reduce UPB; they do not, but they do reduce the net claim through the Part B escrow line.
A named example: Servicer Mu reports UPB as $187,432 (the post-foreclosure figure) instead of $189,210 (the date-of-default figure). HUD denies $1,778 plus the interest difference.
Foreclosure Costs and Attorney Fees
Allowable foreclosure costs are capped by the HUD Attorney Fee Schedule, which sets state-by-state maximums for non-judicial and judicial foreclosures. The schedule updates periodically through Mortgagee Letters.
The consequence of exceeding the cap is dollar-for-dollar denial of the excess. A common misconception is that complex litigation justifies fees above the cap; HUD only allows above-cap fees with a pre-approved Reasonable Diligence variance.
A named example: Attorney Nora Patel charges Servicer Nu $3,800 in Florida (judicial state) where the cap is $3,000. HUD pays $3,000; Nu eats $800.
Property Preservation and Protection (P&P)
P&P expenses include securing, winterizing, debris removal, lawn maintenance, and emergency repairs. Each expense must be at or below the local HUD allowable and must be supported by photographs and invoices.
The consequence of exceeding the allowable without an over-allowable approval is denial of the excess. A common misconception is that P&P begins at foreclosure sale; under Mortgagee Letter 2022-22, P&P begins when the property is found vacant during the pre-foreclosure occupancy inspection.
A named example: Servicer Omicron spends $1,500 on a roof tarp in Atlanta. The local allowable is $1,200. Without prior over-allowable approval, HUD pays $1,200.
Three Common Scenarios
The following tables walk through three of the most common claim scenarios and the dollar consequence of each filing choice. Each scenario assumes a $185,000 UPB and the current HUD debenture interest rate.
Scenario 1: Conveyance Claim Filed on Time
| Filing Step | Result |
|---|---|
| Part A filed 30 days after conveyance | Full UPB paid in debentures or cash |
| Reasonable diligence met under 24 CFR § 203.356 | No interest curtailment |
| Part B P&P at or under allowable | Full P&P reimbursement |
| Part C supplemental filed within 6 months | Late-discovered taxes paid |
| Total recovery | ~$198,400 including interest |
Scenario 2: CWCOT Third-Party Sale
| Filing Step | Result |
|---|---|
| Foreclosure sale to third party at 95% of CWCOT Commissioner’s Adjusted Fair Market Value | Sale proceeds credited to claim |
| Part A filed within 60 days of sale | UPB minus sale proceeds reimbursed |
| Net Sales Proceeds reported under Mortgagee Letter 2021-23 | Shortfall paid by HUD |
| No conveyance to HUD | No P&P after sale |
| Total recovery | Loss reduced by ~$25,000 vs. conveyance |
Scenario 3: Pre-Foreclosure Sale With Approved Variance
| Filing Step | Result |
|---|---|
| Borrower approved for PFS under Handbook 4000.1 III.A.2.j | $1,000–$3,000 relocation incentive paid |
| Sale closes within 4 months of ATP | Part E filed within 60 days |
| Net proceeds 84% of as-is value | Within program tolerance |
| Part D supplemental for unpaid taxes | Reimbursed up to allowable |
| Total recovery | Avoids foreclosure cost, preserves credit |
Named Examples in Detail
Example 1 — Servicer Ramirez & Co. (Conveyance). Servicer Ramirez forecloses on a $210,000 203(b) loan in Ohio. Foreclosure completes in 245 days, inside Ohio’s reasonable diligence timeframe. Ramirez conveys to HUD on day 30 after sale, files Part A on day 40, and receives full UPB plus interest. The total claim equals $223,150.
Example 2 — Brown Mortgage Servicing (CWCOT). Brown servicing’s borrower abandons a $156,000 loan in Arizona. Brown elects CWCOT under Mortgagee Letter 2021-23, and the property sells to an investor at the trustee’s sale for $148,000. Brown files Part A for the $8,000 shortfall plus interest and approved fees, recovering $14,750 in total.
Example 3 — Chen Capital (PFS). Borrower Tomas Reyes lists his Miami home for $310,000 under a HUD-approved PFS. The home sells for $298,500, netting 92 percent of value, well above the 86 percent floor. Chen files Part E within 30 days of closing, claims the $3,000 relocation incentive for Tomas, and recovers the $14,200 deficiency in 21 days.
Calculating Debenture Interest the Right Way
Debenture interest is the single biggest line item after UPB and the single most curtailed line item on Form 27011. It accrues from the date of default to the date of claim filing at the HUD debenture interest rate in effect on the date the commitment for insurance was issued.
The plain-English formula is straightforward. Multiply the UPB by the debenture rate, divide by 365, and multiply by the number of allowable days. The consequence of using the note rate instead of the debenture rate is overstatement and denial.
A named example: Servicer Patel calculates interest at 6.50 percent (the note rate) instead of the 2.375 percent debenture rate on a 2020-issued commitment. On a $200,000 UPB for 400 days, Patel overstates the claim by $9,041.
A common misconception is that interest runs to the date HUD pays. It does not. Interest stops at the claim filing date unless HUD pays late, in which case 24 CFR § 203.410 provides additional interest at the same debenture rate.
Reasonable Diligence and First Legal Deadlines
Reasonable diligence is the maximum time HUD allows to complete foreclosure, measured from the first legal action date through the foreclosure sale or conveyance. The timeframes appear in Appendix 4.0 of Handbook 4000.1 and vary by state, from roughly 4 months in Texas to over 18 months in New York.
First legal action is the start of foreclosure under state law, such as the Notice of Default in California or the complaint filing in New York. The consequence of missing first legal is curtailment of interest from the deadline forward.
A named example: Servicer Singh files first legal on day 195 in Illinois where the deadline is day 180. HUD curtails 15 days of interest immediately and continues to curtail until Singh re-aligns with the schedule.
A common misconception is that loss mitigation review pauses the clock. It does not, unless the borrower is in an active loss mitigation option documented in SFDMS with a recognized status code.
Mistakes to Avoid
Avoid these seven errors, each of which has been called out in HUD OIG audits or DOJ False Claims Act settlements:
- Misstating the date of default, which slides the entire curtailment timeline and costs hundreds of dollars per day in lost interest
- Filing under the wrong Mortgagee ID, which causes outright rejection and forces a new filing under tighter deadlines
- Submitting Part A with the wrong claim type code, which routes the claim to the wrong queue and triggers a manual reconciliation
- Exceeding the Attorney Fee Schedule, which results in dollar-for-dollar denial of the excess
- Charging P&P above the local HUD allowable without an approved over-allowable, which is the single most common P&P denial reason
- Missing the 45-day Part A filing window or the 6-month Part C/D supplemental window, which permanently bars the affected dollars
- Failing to reconcile SFDMS status before filing, which causes edit-check rejections inside FHA Connection
Do’s and Don’ts
Do the following on every claim:
- Reconcile SFDMS status the same week you file, because mismatched status causes 30-day suspensions
- Pull the debenture interest rate for the commitment date, not today’s date, because using today’s rate overstates or understates interest
- Document every P&P expense with photos and invoices, because HUD requires evidence under Handbook 4000.1 III.A.3.c
- File an Extension of Time before the deadline expires, because HUD almost never grants retroactive extensions
- Audit the claim against a checklist before submission, because a single typo can delay payment 30 to 60 days
Don’t make any of these errors:
- Don’t file Part A using the foreclosure sale date as the default date, because that overstates the default period
- Don’t combine PFS expenses with conveyance expenses on the same form, because the claim types use different schedules
- Don’t use the note interest rate to calculate debenture interest, because the debenture rate is almost always lower
- Don’t ignore Mortgagee Letters, because each ML can override fee schedules and timeframes mid-cycle
- Don’t submit without verifying the MERS assignment chain, because broken chains trigger HUD’s authority-to-foreclose denials
Pros and Cons of Filing Form 27011 In-House
Pros:
- Retains control of the claim cycle, which means faster reconciliation when HUD raises questions
- Preserves margin by avoiding third-party claim filer fees, which can run 1 to 2 percent of recovered proceeds
- Builds in-house expertise on Handbook 4000.1, which lowers risk on future portfolios
- Speeds appeals because the same staff that filed can defend the claim during reconsideration
- Strengthens FCA compliance through tight quality control
Cons:
- Requires expensive staff training because the rules change with every Mortgagee Letter
- Increases False Claims Act risk if controls are weak, as shown in the Wells Fargo case
- Demands robust FHA Connection and P260 system access management
- Concentrates operational risk when claim staff turnover spikes
- Forces servicers to absorb the cost of curtailments instead of sharing it with a vendor
Court Rulings and Enforcement Recap
Three major settlements show the real cost of filing Form 27011 carelessly. In the $1.2 billion Wells Fargo settlement, DOJ alleged that the bank submitted false certifications tied to FHA claims for loans that never qualified. In the $32.5 million Rocket Mortgage agreement, the government targeted a “Jumbo Rocket” underwriting practice that polluted later Form 27011 filings.
In United States v. Americus Mortgage, the Second Circuit upheld FCA liability where servicers certified compliance with HUD rules they had not actually followed. The consequence in each case was treble damages plus penalties, and several individual executives faced personal liability under FIRREA.
A common misconception is that only originators face FCA risk. Servicers face equal exposure because every Form 27011 includes a Part A certification signed under penalty of false statement under 18 U.S.C. § 1001.
State-Level Nuances
While Form 27011 is federal, the inputs come from state foreclosure law. Judicial foreclosure states like Florida and New York generate longer reasonable diligence timeframes, larger attorney fees, and more frequent Part C supplementals.
Non-judicial states like California and Texas move faster, but they impose stricter notice rules, and a missed notice resets the entire first-legal clock.
A named example: Servicer Vega misses the Texas 21-day posting requirement, restarts the sale, and blows reasonable diligence by 28 days. HUD curtails $4,300 in interest because the missed posting is not a HUD-recognized delay.
Frequently Asked Questions
Is HUD Form 27011 the only form needed to file an FHA insurance claim?
No. Servicers must also submit supporting documents, including the foreclosure deed, evidence of good title, tax certifications, SFDMS status, and P&P documentation.
Can a mortgagee file Form 27011 after the deadline?
No. HUD enforces the 45-day Part A and 6-month supplemental windows strictly, and only a pre-deadline Extension of Time preserves the claim.
Does HUD pay claims in cash or debentures?
Yes. HUD pays in cash for most claim types today, but may issue debentures on selected programs as authorized by the National Housing Act.
Is the date of default the same as 90 days delinquent?
No. Date of default is the day after the due date of the last paid installment, per Handbook 4000.1.
Can servicers correct Form 27011 after submission?
Yes. Servicers may file a Part C or Part D supplemental within six months of the original payment to add allowable items.
Does HUD reimburse all attorney fees?
No. HUD reimburses only fees at or below the Attorney Fee Schedule, absent a pre-approved variance.
Is a CWCOT claim filed on Part A or Part E?
Yes. CWCOT claims start on Part A using the CWCOT claim type code; Part E is reserved for Pre-Foreclosure Sales.
Does HUD pay interest after the claim is filed?
Yes. If HUD itself pays late, additional interest accrues at the debenture rate under 24 CFR § 203.410.
Can a servicer be sued under the False Claims Act for Form 27011 errors?
Yes. Both DOJ and HUD OIG regularly pursue servicers for material misstatements on the form.
Is escrow shortage reimbursable on Part B?
Yes. Escrow advances for taxes and insurance are reimbursable on Part B, subject to documentation under Handbook 4000.1 V.B.2.
Does HUD accept paper Form 27011 submissions?
No. All filings must move through FHA Connection or an approved EDI channel.
Is a Partial Claim filed on Form 27011?
Yes. A HUD Partial Claim is claimed on Part D using the partial-claim claim type code after the subordinate note is executed.
Related reading
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