To
comply with required time frames, an Extension of Time is a tool
afforded to mortgagees to assist in the initiation or completion
of HUD's Loss Mitigation Program (except Preforeclosure Sales Program)
and/or foreclosure action. A mortgagee is required to submit to
NSC-Oklahoma City, form HUD-50012,
Mortgagee's Request for Extensions of Time, prior to the expiration
of the respective time frame via Fax Number (405) 609-8405.
New
State Foreclosure Legislation
Reminder - The Department has been advised that due to a recent
change in State Law some foreclosures had to be cancelled and rescheduled
to complete all the new legislative requirements. A ninety (90)
day extension to commence foreclosure is provided to those mortgages
where the initial legal action to commence foreclosure has been
timely and the foreclosure sale would have been conducted in the
required month but was cancelled to comply with the new legislation.
Mortgagees must clearly document the full chronology including this
delay in their files and must also indicate this approved extension
in Part A, block 19 of the claim. This extension is provided under
the authority of 24 CFR 203.355. Written extension requests do not
need to be submitted to HUD.
Question
1 - A mortgagor often contacts a mortgagee in a last minute
attempt to save their home from foreclosure. The mortgagee is in
receipt of a workout packet, has validated the mortgagor's ability
to pay and contacted foreclosure counsel to ask for a 30-day postponement
of the sale date. This affords the mortgagee time to complete the
analysis, determine the best workout option, obtain a commitment
from the mortgagor and either approve or deny the workout. The mortgagee
also finds that this decreases potential contested cases and removes
the threat of a bankruptcy filing. Does the 90-day automatic extension
apply in the event the workout is denied or does the mortgagee need
to request an Extension to meet their deadline to institute foreclosure?
Answer - Judicial States - If the mortgagor's property
is located in a state that allows the mortgagee to place the foreclosure
on hold then there is no need for an Extension of Time to meet
the first legal because the mortgagee has already met it. If the
loss mitigation option fails, the mortgagee would document their
claim review file and recommence foreclosure proceedings. (See
HUD Handbook 4330.4, page 1-11, Paragraph F.3. - Time Frames for
Completion of Foreclosure).
Non-Judicial
States - If the mortgagor's property is located in
a state that requires the mortgagee to cancel an active non-judicial
foreclosure, then the mortgagee will need to submit a Request
for Extension of Time to cover the time missed by the canceled
foreclosure.
EXAMPLE: 11/01 - Original First Legal Deadline Date
10/28 - Mortgagee initiated foreclosure (First Legal met)
12/05 - Mortgagee receives Loss Mitigation Package and determines
Mortgagor qualifies for a Special Forbearance Agreement
12/05 - Mortgagee submits Extension of Time Request to NSC for
approval
12/06 - Mortgagee receives approval of Extension of Time Request
from NSC and therefore "cancels" the foreclosure action.
NEW FIRST LEGAL DEADLINE DATE will be calculated from the "Original"
First Legal Deadline Date
Question
2 - A mortgage loan has the default date of 10/01/07; therefore,
the six-month deadline to initiate foreclosure is 04/01/08. The
mortgagee reviewed the loan on 02/07/08 and approved the mortgagor
for a Special Forbearance option on 03/09/08. The mortgagor made
the first payment on 03/14/08, but failed to return the executed
Special Forbearance Agreement. Is the mortgagee eligible for an
automatic 90-day extension of time?
Answer - Mortgagee Letter 2002-17, page 8, "Automatic
Extension" states in part: If a mortgagee has initiated but
is unable to complete a Special Forbearance option within the
initial six-month time limit and reported the action in the Single
Family Default Monitoring System using the appropriate status
code (09, 12 or 32), the mortgagee is entitled to an automatic
90-day extension of the foreclosure deadline. However, to complete
the Special Forbearance option, the mortgagee must still obtain
the executed Special Forbearance agreement from the Mortgagor
within the automatic 90 day extension of foreclosure time to meet
the time requirement as stated in Mortgagee Letter 00-05, Section
K, page 12, "Time Requirement to Initiate Action."
Question
3 - During the automatic 90-day extension of time that was utilized
in Question 2 above, the mortgagor's circumstances have changed
and the Special Forbearance cannot be completed. The mortgagor qualifies
for a different Loss Mitigation Option but this cannot be completed
within that automatic 90-day extension of time. Is there another
automatic 90-day extension of time since the Loss Mitigation Option
has now changed?
Answer
- If during this automatic 90-day extension of time the mortgagee
cannot complete the Special Forbearance and must now utilize a different
Loss Mitigation Option and is unable to complete within this timeframe,
the mortgagee must submit a Request for Extension of Time form HUD-50012
to NSC-Oklahoma City to extend the foreclosure deadline before the
expiration of the automatic 90-day extension of time.
Question
4 - Help me understand Authorized Automatic Extensions
Bankruptcy
Extensions - Per
Mortgagee Letter 1998-07, a 90 day extension of time is allowed
for the prohibition of foreclosure due to Bankruptcy or for prohibition
to foreclosure due to state law. The Mortgagee is granted an automatic
90 days from the relief date of Bankruptcy to commence or recommence
Foreclosure action or consider Loss Mitigation Options. The 90 days
includes the time to issue new demand/breach notices if needed.
This automatic 90 day extension can not be combined with the automatic
extension of time for initiating Loss Mitigation.
Disaster
Extensions
- All the National Disaster Areas identified by FEMA (www.fema.gov)
will be subject to a 90 day Moratorium on foreclosures following
the disaster. See HUD HB 4330.1 REV-5, Chapter 14. In addition,
per Mortgagee Letter 2006-18, Mortgagees are granted an automatic
90 days from the date of the moratorium expiration date to commence
or recommence foreclosure action or consider Loss Mitigation Options.
Servicemembers
Civil Relief Act (SCRA)
- A 90 day extension is also allowed for Mortgagors protected under
the Servicemembers Civil Relief Act (SCRA). More information can
be found for the SCRA from Mortgagee Letter 2006-28.
Question
5 - Help me understand how to Calculate the First Legal Deadline
Date (FLDD)
Special
Provisions for Type 1 Special Forbearance
(Default caused by Unemployment) - All payments have been received
in accordance with the Agreement; yet Mortgagor has not been able
to acquire employment. 60 Consecutive Days of failure is to begin
from the LAST paid due date of Agreement, then Mortgagee is entitled
to the Automatic 90 days extension. EXAMPLE: Special Provision for
Type 1 SFB states 4 payments due as follows:
1/20/08
2/20/08
3/20/08
4/20/08 - 60 days of failure starts
6/19/08 - 90 days of Automatic 90 day extension begins
9/17/08 - FLDD
Special Forbearance Type 2 - All payments have
been received in accordance with the Agreement. Executed Documents
have NOT been returned to lender. 60 Consecutive Days of failure
is to begin from the LAST paid due date of Agreement, then Mortgagee
is entitled to the Automatic 90 days extension. EXAMPLE: SFB Type
2 states 4 payments due as follows:
03/15/08
04/15/08
05/15/08
06/15/08 - 60 days of failure starts
08/15/08 - 90 days of Automatic 90 day extension begins
11/15/08 - FLDD
Vacant/Abandoned,
Defaulted Mortgage - Per Mortgagee Letter 1998-07 - 24 CFR
203.355, Acquisition of Property - The final rule now requires
that the mortgagee must initiate foreclosure or take one of the
other actions specified in the rule (24 CFR 203.355 (a)) within
six months from the date of default. This change shall apply to
all mortgages where the date of default is on or after February
1, 1998. (B) Vacant or abandoned property - The Loss Mitigation
Final Rule did not change any of the requirements for properties
that have become vacant or abandoned 203.355 (b). 2. If the mortgage
is in default and the property has been determined to be vacant
or abandoned, foreclosure must be initiated by the earliest of:
(a) six months from the date of default, OR (b) 120 days after
the date the property become vacant, was discovered vacant or
should have been discovered vacant.
Vacant
Current Mortgage - EXAMPLE - Mortgagee completed a property
inspection on a CURRENT mortgage. This inspection, under HUD's
guidelines, would be considered as the "Initial Property Inspection."
Property was found to be VACANT. The following is provided:
06/25/07 Property Inspection Conducted, mortgage current,
property is vacant
07/25/07 July/07 payment made
08/23/07 Aug/07 payment made
09/19/07 Sep/07 payment made
10/24/07 Oct/07 payment made
11/01/07 Nov/07 payment due and unpaid - mortgage delinquent
12/01/07 2 payments due and unpaid - mortgage in default
12/16/07 Property Inspection Conducted - Property vacant
NSC
Management has stated that the 6/25/07 property inspection is
NOT to be considered in determining FLDD. The 12/16/07 property
inspection is to be utilized in determining 120 days from "known"
vacancy as FLDD for Mortgagee to initiate foreclosure.
Question
6
- Help me Determine the Due Date To Submit Partial Claim (PC) Documents
For Recordation
"Upon
execution of a partial claim by a mortgagor, the Department requires
that the partial claim security instruments be submitted for recordation
to the appropriate jurisdiction within a maximum period of five
(5) business days following the execution AND prior to filing
a claim with HUD." [Mortgagee Letter 2003-19, page 6, Paragraph
O. Recordation Requirements]
Headquarters
has concurred stating that since the Mortgagee does not have
control over when the Mortgagor executes and returns the document
to the Mortgagee, the "5 business days" begins from the date
the Mortgagee receives the executed documents back from Mortgagor.
Extension
of Time Requests on Partial Claim documents being provided to
HUD Contractor within 6 months, the Mortgagee must provide the
following information:
- Date PC was
executed by Mortgagor
- Date executed PC documents were received from Mortgagor
at Mortgagee
- Date Mortgagee
sent PC documents to recording office - This date is to
be 5 business days from the date the PC documents were
received from Mortgagor at Mortgagee.
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