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Message: We have a loan to a borrower secured by their primary residence. There are past-due property taxes from years 2013, 2014, and 2015. The Bank paid the 2013 taxes (no escrow account exists) to avoid the property being sold at a tax sale. Furthermore, the borrower is not keeping hazard insurance current and we have continually force-placed coverage. The loan is currently 62 days late. Does the 120-day RESPA foreclosure protections apply since they violated their contractual obligation to keep property taxes/insurance current? Thanks.
Reg X doesn’t state any exception to the rule listed below. I would contact your attorney to see what options you have available.
1024.41(f)(1) says:
(1) Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless:(i) A borrower’s mortgage loan obligation is more than 120 days delinquent;
(ii) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or
(iii) The servicer is joining the foreclosure action of a subordinate lienholder.
And the CFPB has indicated that we can use the definition of delinquency in the prior section of Reg X as guidance for determining delinquency.
1024.40(a)-3. Delinquency. For purposes of § 1024.40(a), delinquency begins on the day a payment sufficient to cover principal, interest, and, if applicable, escrow for a given billing cycle is due and unpaid, even if the borrower is afforded a period after the due date to pay before the servicer assesses a late fee. See the example set forth in comment 39(a)-1.i.
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