Topic: Mortgage Foreclosures
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We would like to finance the sale of an OREO property to a buyer who cannot provide the required down payment to satisfy the initial investment required by the OREO accounting rules (10% in this case). Can the buyer satisfy the initial investment requirement by providing another property as collateral, or by making substantial improvements valued over 10%? What if we were to provide a bridge loan to the buyer for improvements before selling the property to the borrower? Our FDIC examiners are telling us that these approaches are acceptable for the full accrual accounting method, but our accounting firm disagrees.
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We cannot provide guidance on whether any of these approaches would satisfy the criteria for full accrual accounting, and we recommend following the advice of your accounting firm. To ensure that you are on the same page with your FDIC examiners, we recommend reviewing the FFIEC Call Report Instructions and the relevant FASB Accounting Standards. …
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We would like to extend a business-purpose mortgage loan to an Illinois corporation that is solely owned by a German corporation. We understand the collection risks, but would there be any foreclosure issues, given the company’s foreign ownership? Also, we are opening a deposit account for the Illinois corporation and a related foreign company — are there any other compliance considerations?
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Mortgage Foreclosure Considerations We are not aware of any special considerations that would apply when foreclosing a loan made to a foreign-owned Illinois corporation. The borrowing entity will be treated as a domestic corporation (as defined in the Illinois Business Corporation Act of 1983), since it was incorporated in Illinois, irrespective of its foreign ownership.…
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What is the statute of limitations for collecting on a mortgage loan? Are we required to notify a borrower that we will continue collecting on a loan after charging it off? Also, for how long should we continue to report a charged-off mortgage loan to consumer reporting agencies?
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The statute of limitations for collecting on a defaulted promissory note or foreclosing on the mortgaged property is ten years, though slightly different statutory provisions apply in either case. If you are collecting on the promissory note, the statute of limitations is ten years after the claim accrues. If you are foreclosing on the mortgaged…
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Under the upcoming TRID rules, the new Closing Disclosure must state whether a consumer “may remain responsible for any deficiency after foreclosure.” Does Illinois law protect borrowers from personal liability for the unpaid loan balance after a judicial sale?
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No, Illinois law does not protect borrowers against deficiencies after the judicial sale. The Illinois Mortgage Foreclosure Law states that a foreclosure does not affect the lender’s right to obtain a personal judgment against the borrower in the event of a deficiency. A number of Illinois courts have permitted a mortgagee to pursue a money…
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Do you know of any financial institutions that have been penalized for targeting and offering products and services to Spanish-speaking customers without providing Spanish disclosures?
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No, we are not aware of any financial institutions that have been fined or have paid civil money penalties for offering products and services to Spanish-speaking customers without providing disclosures in Spanish. However, you should be aware of two statutory notice requirements in the State of Illinois relating to residential mortgage foreclosures. One requirement applies…
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Did the federal Protecting Tenants at Foreclosure law expire on December 31, 2014? We realize the Illinois law is still in place, so how should we update our policy and procedures?
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Yes, the Protecting Tenants at Foreclosure Act of 2009 expired on December 31, 2014. See the notes to 12 USC 5220