[shea930]

Under the Loss Mitigation rules for a small servicer its states “A servicer shall not make the first notice of filing required by applicable law for any judicial or non-judicial foreclosure unless: (iii) The servicer is joining the foreclosure action of a subordinate lienholder.”

What if we are the subordinate lienholder and our lien is current however the 1st lienholders mortgage is delinquent and the foreclosure process has been initiated? Can we join the foreclosure or do we still have to wait until our loan becomes delinquent 120 days?

[Bankoftn]

Good question. I am interested in the response as well.

[Mary Frances]

We want to know this as well. And add to the question… what if the loan is a HELOC that has matured but the consumer is still making the interest payments. Can the bank refuse the payment in order to join the 1st lienholder in foreclosure?

[jholzknecht]

“A servicer shall not make the first notice of filing required by applicable law for any judicial or non-judicial foreclosure unless: (iii) The servicer is joining the foreclosure action of a subordinate lienholder.”

The guidance in 1024.41(f)(1)iii is very precise. It does not mention a subordinate lienholder joining the first lienholder in an action. It does not address a matured HELOC.

We can speculate on the answers to these vary valid questions, but unfortunately the only answers that count come from the CFPB or the courts.

[Author]

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