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Originally posted in Compliance Masters Group Forum by mbarnes:
It is our understanding that we should not make the first notice or filing for foreclosure unless the consumer’s loan is more than 120 days delinquent. Does this mean that our attorney cannot send a Demand Letter until the 121st day of delinquency?
An Additional question regarding foreclosure and the 120 day rule…. Our bank attorney is asking this question “Can a bank refuse a monthly payment on a loan more than one month past due to prevent a debtor from avoiding going 120 days past due but at the same time never getting the loan current and therefore being on the past due list until the loan matures?” In his research he has found many consumer and bankruptcy websites already advising debtors not to worry about late payments so long as they don’t go 120 days past due. His fear is this could turn into a major problem and past dues could skyrocket.
Foreclosure is a state law process. If under the law of your state the Demand Letter is the first notice, then it cannot be sent until the consumer is 120 days past due.
If the borrower makes a legal payment (in U.S. Dollars and meets any other requirement you may impose) the bank must accept the payment and credit the payment as of the date of receipt, unless other payment conditions have been established.
It is hard to image this scenario becoming common. Apparently the consumer has the ability to make a monthly payment, but chooses to remain delinquent thereby destroying his or her credit history and paying continuing late charges.
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