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Frequently Asked HUD Debt Questions

Does your firm do loan modifications?

No, we are not a loan modification law firm.  You will need to contact local counsel for help with a loan modification.

Can your firm defend a foreclosure?

No, we are not a foreclosure defense law firm.  You will need to contact local counsel for help with a foreclosure defense.

I received a HUD Demand Notice. Can I compromise my debt for less than the full amount?

If you have received a HUD Demand Notice, you have a very short to submit a settlement by compromise or a HUD repayment agreement.  Each case is fact specific and your ability to settle by compromise will depend on your legal defenses and financial condition.

I received a Notice of Administrative Wage Garnishment. What should I do now?

You have a limited time to respond.  If you fail to respond appropriately, the government can garnish up to 15% of your wages.  Our firm can prepare a defense to a Notice of Administrative Wage Garnishment.

I received a Notice of Intent to Collect by Treasury Offset (NOI). What does this mean? What should I do?

This notice informs you that HUD intends to refer the debt to the Department of the Treasury for administrative offset of federal payments, e.g., taking a portion of your federal pay, military pay, military retirement pay, etc. (via Treasury Offset Program) if the debt is not resolved.  The notice also informs you that you have a right to an administrative review of the debt (i.e. an appeal).

How does your firm get paid?

We charge a fixed fee for our services.  We found that a fixed fee is more viable for our client as their legal fees are predictable and certain.

What does a HUD Demand Notice Look Like?

DEMAND NOTICE (Sample)

[INSERT DATE]

[INSERT DEBTOR’S NAME]              

[INSERT STREET ADDRESS]

[INSERT CITY, ST, ZIP]

Dear [INSERT NAME]:

SUBJECT:  HUD CLAIM NUMBER:  [INSERT CLAIM NUMBER]

LENDER:  [INSERT LENDER NAME]

DATE OF LOAN:  [INSERT DATE OF LOAN]

BASIS AND AMOUNT OF DEBT:  The U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration, insured the above [INSERT TYPE OF DEBT] loan against nonpayment under Title I of the National Housing Act.  When you defaulted on the loan on [INSERT DATE OF DEFAULT], the entire debt was accelerated (became due in full) and the lender filed an insurance claim with HUD.  When HUD paid the insurance claim, all rights, title and interest in this claim were transferred to HUD, and it became the Department’s responsibility to collect the amount you owe.  As of [INSERT DATE: LAST DAY OF PREVIOUS MONTH], you owe the total amount of [INSERT TOTAL DUE], which consists of [INSERT PRINCIPAL DUE] principal and [INSERT INTEREST DUE] interest and [INSERT OTHER CHARGES DUE] other charges.  Interest will be added monthly to the unpaid principal amount at the rate of [INSERT INTEREST RATE]% per year until your account is paid in full.

PENALTIES AND ADDITIONAL CHARGES:  In addition to interest charges, HUD will add a penalty and a charge for its administrative costs to your debt if you do not pay.  The penalty will be 6% of the debt balance.  An additional penalty and charge for administrative costs will be added each year that your debt remains delinquent.  You may avoid the penalty and additional charge for administrative costs by paying your debt in full by [INSERT DATE: 90 DAYS AFTER LETTER DATE].  You may also avoid the penalty and charge for administrative cost if you are current on a repayment plan acceptable to HUD.

If you fail to pay HUD, your delinquent debt may be referred to the Department of the Treasury for collection.  Treasury may in turn refer your debt to a private collection agency.   Should your debt be referred to Treasury, collection fees and charges up to 30% or more will be added to your debt.

BANKRUPTCY:  If you filed for bankruptcy and were discharged, or if you have not received a discharge and the automatic stay is in effect, please send your bankruptcy papers to me at the above address.

PAYMENT INSTRUCTIONS:  HUD has reviewed the debt and made an initial decision that the debt is valid and due.  This letter is a demand for payment of the unpaid balance shown above.  Therefore, you must send the balance in full to our payment processing facility below. Please make your check payable to “US Dept. of HUD” and write the HUD claim number on the front of the check.

HUD – FHA Title I Payments

PO Box 105664

Atlanta, GA 30348

NOTE:  The Atlanta address is for payments only.  All other correspondence should be sent to the HUD Financial Operations Center address shown at the top of the first page of this letter.

Although the entire debt is due, if you are unable to pay in full at this time, HUD may allow you to enter into a repayment plan.  If you would like to enter into a repayment plan, and you can document your inability to pay in full, complete the enclosed Financial Statement (HUD Form 56142) and return the form to my attention at the Financial Operations Center.  Upon receipt of the completed form, I will contact you to discuss terms for repayment.

FAILURE TO PAYIf you do not make the full payment or enter into an acceptable repayment plan by [INSERT 30 DAYS FROM DATE OF THIS NOTICE], HUD may:

  • offset your Federal income tax refunds
  • offset any eligible Federal funds that may be due you, including Social Security Benefits
  • garnish your wages
  • offset your Federal salary or retirement, including military pay or military retired pay
  • foreclose on your home if the loan is secured by a lien
  • obtain a judgment against you in Federal Court
  • refer your debt to the Department of Treasury for collection, including referral to private collection agencies
  • take action that could prevent you from obtaining federal assistance in the form of a loan, a loan guarantee, or loan insurance.

The Debt Collection Act of 1982 (PL 97-365) as amended by the Debt Collection Improvement Act of 1996 (PL 104-134), authorizes the use of administrative offset (31 USC 3716) to withhold Federal payments to collect delinquent debt.  Through the Treasury Offset Program (TOP), any eligible payments owed to you from any agency of the US Government can be offset to reduce the amount you owe on your delinquent account.

If you would like further information about your debt, please contact me at 1-800-669-5152, extension [INSERT DSR’S EXTENSION] or write to me at the address shown at the top of the first page of this letter.

Sincerely,

[INSERT DSR’S NAME]

Debt Servicing Representative

What does a Notice of Intent to Collect by Treasury Offset look like?

NOTICE OF INTENT TO COLLECT BY TREASURY OFFSET (Sample)

 

[INSERT NAME]                                                     Date of Notice:

[INSERT STREET NAME]                                  Type of Loan:

[INSERT CITY, ST, ZIP]                                       Date of Loan:

Lender:

Date of Default:

Principal Due:

Interest Due:

Other Charges Due:

Total Amount Due:

As of:

Claim Number:[bold]

 

READ THIS NOTICE CAREFULLY, IT CONTAINS IMPORTANT INFORMATION CONCERNING THE OFFSET OF YOUR INCOME TAX REFUND AND OTHER FEDERAL PAYMENTS YOU RECEIVE!  THE LAW THAT AUTHORIZES THIS PROCEDURE CAN BE FOUND GENERALLY AT SECTION 3716 AND 3720 OF TITLE 31 OF THE UNITED STATES CODE.

The U.S. Department of Housing and Urban Development (HUD) insured the above loan against non-payment.  When you failed to pay the lender as agreed, the lender transferred your loan to HUD and gave HUD the right to collect the debt from you.  Since your debt is delinquent, HUD intends to collect this debt by Treasury Offset as described below until all other charges, accumulated interest and the principal are paid in full.  HUD will take this action on or after (insert date 65 days from date of notice) unless you pay your debt or take other action as described below.

TREASURY OFFSET PROGRAM

We will refer your account to the Treasury Offset Program.  This program allows the U.S. Department of the Treasury to offset money that the Federal Government owes you to satisfy your debt.  A state income tax refund may also be subject to offset.  This process is known as administrative offset.  The U.S. Department of the Treasury may not send you further notice before your payment(s) are offset.  Federal payments that Treasury may offset include:

  • Your Federal income tax refunds (also authorized by 31 U.S.C. 3720A);
  • A portion of your Federal salary, including military pay and retired military pay (also authorized by 5 U.S.C. 5514);
  • A portion of your Federal retirement;
  • Payments due you as a Government contractor/vendor;
  • A portion of certain Federal benefit payments, such as Social Security, Railroad Retirement (other than tier 2), and Black Lung (part B) benefits; and
  • Other Federal payments, including certain loans to you, which are not exempt from offset.

YOUR RIGHTS

  1. You may pay your debt.

If you pay your debt by (insert date 65 days from date of notice), you will avoid offset.

You may send a check or money order payable to HUD for the full amount. Write Claim Number (Insert Claim #) on the check.  Send payment to:

HUD – FHA Title I Payments

PO Box 105664

Atlanta, GA  30348

If you are unable to send the full amount, you may enter into a written repayment agreement that is acceptable to HUD.  You must contact (insert DSR name) at 1-800-669-5152, extension (insert DSR phone extension), or write to the address shown at the top of the first page of this letter.  If we accept your plan, you must make the payments required in the repayment plan to avoid offset.  Interest will continue to accrue on the unpaid principal amount at a rate of (insert interest rate)% per year.

  1. You may inspect and copy HUD’s records related to the debt or you may request HUD to provide a copy of such records.

To do so, you must send a letter to the address shown at the top of the first page of this letter by (insert date 20 days from date of notice.

3. You may request a review of HUD’s determination that you owe a delinquent debt.

If you believe you do not owe the debt, and you wish to challenge this action, you have the right to obtain a review of HUD’s initial determination that the debt is past-due and legally enforceable.  To exercise this right, you should send a letter by (insert date 20 days from date of notice) stating that all or part of the debt is not past-due or not legally enforceable and that you intend to present evidence. Include Claim Number (insert Claim Number) on your letter.

Send your letter and a copy of this Notice to:

HUD Office of Appeals

1707 H Street NW, 11th Floor

Washington, DC 20006

Your evidence must be submitted to the Office of Appeals by (insert date 65 days from date of notice) or within other deadlines communicated to you by the Office of Appeals.

If you filed for bankruptcy and were discharged, or if you have not received a discharge and the automatic stay is in effect, you are not subject to these actions.  You should send copies of your bankruptcy petition, Order for Relief, the schedule of creditors, and any discharge order to the Office of Appeals with your letter.

In order for your appeal to be reviewed by the appropriate hearing officer, your letter must state if you are a current federal employee (including a current member of the Armed Forces or Reserves) or retired from the United States Military.

If you are filing a request for a review on behalf of both you and your spouse on a joint debt, you should clearly indicate in your letter that it is for both you and your spouse.  Upon receipt of your letter, the Office of Appeals will tell you what you must do next.

If you make or provide any knowingly false or fraudulent statements, representations, or evidence, you may be liable for criminal penalties under 18 U.S.C. 1001, 1002, 286, and 287 or other applicable statutes and/or penalties under the False Claims Act (31 U.S.C. 3729-3731).

SPECIAL NOTES:

IF ONLY ONE SPOUSE IS LIABLE FOR THIS DEBT AND YOU FILE A JOINT FEDERAL INCOME TAX RETURN:  You should obtain IRS Form 8379, Injured Spouse Claim and Allocation, before filing your return if you want to protect the share of the income tax refund which may be payable to your spouse who is not a delinquent debtor to the U.S. Government.  The instructions will explain the steps your spouse may take to obtain his or her share of your joint income tax return.

If you have any questions regarding this Notice or your rights, you may contact (insert DSR name) at 1-800-669-5152, extension (insert DSR phone extension) or you may write to the Financial Operations Center at the address shown at the top of the first page of this letter.  Do not use the Financial Operations Center address if you want to appeal or challenge this debt.

Contact Us at (888) 756-9969 or via the blue button below for a Complimentary Case Evaluation

How to Get Started

STEP 1: Contact us to conduct a personal HUD Case Evalution

  • Call TOLL FREE:  888-756-9969
  • Complete our Intake Form
  • Conduct your Free Case Evaluation with an HUD Attorney

STEP 2: Obtain a personal HUD Case Evaluation from a Federal Agency Practitioner & HUD Attorney, not from an unqualified sales agent or consultant

  • During the Case Evaluation, an HUD Attorney surveys the situation, proposes the most effective and realistic solution tailored to your problems
  • After the Case Evaluation, an HUD Attorney sends you the results in writing, proposes a strategic plan tailored to your problems and then quotes you a sensible fee.

STEP 3: Implement your strategic plan and resolve your problems once and for all

Call  (888) 756-9969  for a Complimentary Case Evaluation with an HUD Attorney or Federal Agency Practitioner

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