These days, you have to take relief when you can get — even if it is in small doses. This week, HUD granted some relief for FHA-approved mortgagees. HUD issued ML 2015-21, which grants additional time to utilize loss mitigation options or initiate foreclosure in certain circumstances.
HUD mortgagees must utilize a loss mitigation option or commence foreclosure within six months of default (Regulation X). Thus, an extension of this timeline is a blessing and a curse. Using an extension may further delay the foreclosure process. However, complying with the CFPB-imposed timelines is often difficult, if not impossible.
In granting mortgagees extra time, HUD reiterated the fact that there are already eight automatic extensions available to mortgagees who may be unable to initiate foreclosure in the time required. HUD has now introduced two additional “new and improved” automatic extensions.
HUD will now allow an automatic extension for commencing foreclosure in those cases in which the servicer needs additional time to comply with the appeals process required by the CFPB. If there is a formal loss mitigation denial, a 90-day extension will begin to run on the date the mortgagee sends notice to the borrower that the loss mitigation effort has been denied.
In addition, HUD has allowed an automatic 90-day extension in cases where a federal regulation requires a delay in the initiation of foreclosure and the delay is not covered in any of the other automatic extensions.
In both of these cases, mortgagees do not need to obtain HUD approval via the EVARS system. However, the mortgagee must document the use of the automatic extension in the claim review file and file reports related to the extension in the SFDMS and on HUD Form 27011, Part A.
The loss mitigation and foreclosure process is very complicated and requires some clear planning and strict adherence to a variety of time restrictions. Those lenders that utilize subservicers must prioritize compliance with these standards in their oversight procedures.
Any compliance relief related to stringent timelines is always welcome, given that lenders are held to a high standard of compliance. So, take this as an ounce of good news.