[kowsley]

We qualify for the small servicer exemption under the servicing rules which still requires us to not begin foreclosure proceedings until the borrower is at least 120 days delinquent. In the past, we have had borrower’s who have never missed a payment and are not late to call and state that they will not be making further payments (due to divorce, etc). Is there nothing we can do but wait until the delinquency is 120 days to start foreclosure proceedings? I can’t find anything in regulation that addresses situations such as this. While they don’t happen often, they do happen.

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[rcooper]

I agree, I haven’t seen anything that would indicate you have an exception from 120 day rule for this type of situation. There are two reasons that foreclosure could begin sooner:
1) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or
2) The servicer is joining the foreclosure action of a subordinate lienholder. [Note: As amended by 9/13/13 final rule.]

Another option is possibly a deed in lieu of foreclosure, but you would need to consult with your attorney on your options and best course of action.

[jholzknecht]

Remember foreclosure is still primarily a state law issue. This section of RESPA overrides state law on this single issue. Robin’s advice to discuss other options with your attorney is sound.

[Author]

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