[rcooper]

A question we received from a member:

We are considered a small servicer and we are wondering if we have to wait 120 days after a mortgage loan is delinquent before we can send the first notice to file foreclosure. We thought we were exempt but now we’re not so sure.

[rcooper]

Small servicers are not exempt from the 120 foreclosure rule you are talking about.

From Regulation X,
1024.41(j): Small servicer requirements. A small servicer shall be subject to the prohibition on foreclosure referral in paragraph (f)(1) of this section. A small servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process and shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of an agreement on a loss mitigation option.

1024.41(f)(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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