Topic: Mortgage Foreclosures
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During the ABA’s recent Mortgage Compliance Q&A call with the CFPB, the CFPB responded to a question by telling us to “check state law.” The question was how to define “delinquency” for purposes of the 120-day stay on foreclosure actions, particularly when a delinquent borrower is occasionally making payments.
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. The new RESPA servicing rules prohibit servicers from initiating a foreclosure action until “a borrower’s mortgage loan obligation is more than 120 days delinquent.” 12 CFR 1024.41(f)(1)(i).…
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We received a law bulletin from a law firm stating that the Illinois “grace period notice” requirement conflicts with the new CFPB rule requiring us to wait 120 days before initiating a foreclosure action. Do you agree?
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. No, you do not have to wait 120 days before mailing the Illinois “grace period notice” to delinquent borrowers, as required by 735 ILCS 5/15-1502.5(c). The new…
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If a borrower is not paying property taxes on the property securing a loan, but is making their mortgage payments, are we required to send the housing counseling notice required by Illinois law? Must we send the notice before initiating legal action?
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. The answer depends on whether the mortgage loan is considered delinquent. The notice requirement in the Code of Civil Procedure (sometimes called the “grace period notice” requirement)…
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Do the new RESPA rules requiring a 120-day grace period before initiating a foreclosure action include an exception for abandoned properties?
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No. There is no exception for abandoned properties in the RESPA prohibition on initiating a foreclosure action before the borrower is more than 120 days delinquent (provided that the property is the borrower's principal residence). 12 CFR 1026.41(f)(1)(i). The CFPB received requests from industry commenters to include such an exception, and the CFPB declined to…
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Under the new CFPB rule requiring us to delay filing a foreclosure action until a borrower is 120 days or more delinquent, what is the definition of the “first notice” in the foreclosure action?
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The new RESPA servicing rules prohibit servicers from initiating a foreclosure action (by filing a “first notice or filing” in the foreclosure process) until the borrower is more than 120 days delinquent. 12 CFR 1024.41(f)(1)(i). The CFPB’s staff commentary defines “first notice or filing” as “the earliest document required to be filed with a court or…
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Under the CFPB’s new mortgage servicing rules, when does the 120-day delinquency period start running?
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. The new RESPA servicing rules prohibit servicers from initiating a foreclosure action until “a borrower’s mortgage loan obligation is more than 120 days delinquent.” 12 CFR 1024.41(f)(1)(i).…
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If we have a property that is going into a foreclosure, under a non-residential mortgage, do we have to do the loss mitigation affidavit before filing? The Cook County version of the loss mitigation affidavit requires us to state why a borrower was not eligible for our loss mitigation programs, and one of the options provided on the form provides that the borrower is ineligible because the mortgage is a commercial mortgage. Since that is the case, do we still have to file a loss mitigation affidavit?
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The new Illinois Supreme Court rules on foreclosure actions do not exempt commercial loans or commercial properties. In fact, the Court’s loss mitigation rule itself expressly states that it applies to “all actions filed under the Illinois Mortgage Foreclosure Law . . . .” Illinois Supreme Court Rule 114. All residential and commercial foreclosures are filed…
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What documentation should we provide to our property managers to show that a residential property has been abandoned? And what documentation should we retain to show our “good faith” determination that a property has been abandoned?
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We believe that a certification and checklist would suffice to meet the safe harbor for entering and securing abandoned residential property. We do not currently offer a checklist or certification form, though the definition of “abandoned residential property” should be helpful in preparing a checklist. 735 ILCS 5/125-1200.5. We would recommend consulting with the property…
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Under the new Illinois Supreme Court mortgage foreclosure rules, do we have to file a loss mitigation affidavit if we do not have an in-house loss mitigation program? Do we need to create one?
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We do not believe that the new Illinois Supreme Court mortgage foreclosure rules would require a bank that does not have an in-house loss mitigation program to start providing such a program. (See the most recent April 8, 2013 version of the rules, which includes some brief committee comments on Rule 114, which mandates the…
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The Illinois Supreme Court mortgage foreclosure rules require us to file an “affidavit of proof.” What are they looking for in those affidavits?
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We recommend consulting with all of the attorneys that the bank may use, to ensure that the attorneys all use the Prove-up Affidavit consistently and accurately. Our comment letter on the proposed version of the rules is attached, and our news item on the rules is available here: https://www.ilbanker.com/News/NewsDetail.aspx?id=286 It may also be helpful to…