Loss Mitigation Rules

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  • #5173

    A question we received from a member:

    I understand the Bank cannot foreclose on residential property unless the payments are 120 days past due. However, the guidance materials I have read to not mention taxes and insurance.
    Non-payment of taxes and insurance is an event of default under the mortgage. The guidance appears to be silent on these two items. If someone has not paid their taxes but remains less than 120 days past due on their loan, would the Bank be able to foreclose? I have the same issue with insurance.


    There is no exception given from the 120 timeframe for defaults resulting from non-payment of taxes and insurance.

    1024.41: (f) Prohibition on foreclosure referral. (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.



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