Topic: Delinquent Borrowers
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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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In today’s difficult economy, we are making more collection calls than we have in recent memory. What rules govern the times of day when we can make collection calls? Are there any Illinois laws that place greater restrictions on collection calls than federal law?
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The federal Fair Debt Collection Practices Act (FDCPA) restricts the timing of collection calls to after 8:00 a.m. and before 9:00 p.m. 15 USC 1692c(a)(1). Of course, that law does not apply to banks (and other businesses) that are collecting their own debts in their own names, though your institution may voluntarily comply with its…
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When a borrower is delinquent on a mortgage loan, we send out the SCRA notice and the Illinois Homeownership Counseling Notice after thirty days and the Federal Notice of Homeownership Counseling after forty-five days. Are there any other notices we should be sending?
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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. Beyond the SCRA and Homeownership Counseling notices required under federal law (12 USC 1701x(c)(5)), and the Grace Period Notices required under Illinois law (735 ILCS 5/15-1502.5), we…
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Can we charge post maturity interest rates on residential loans in Illinois?
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The Illinois Interest Act does address default rates. Section 4.1a states that default rates are limited to five-percent of the installment amount and that they cannot be charged until ten days after default. 815 ILCS 205/4.1a(f). However, we do not believe that the restrictions on interest rates and charges in the Interest Act apply to…
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Do we need to send the foreclosure “grace period notice” immediately after a borrower misses a payment, or can we wait a few months before sending the notice?
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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 Illinois Code of Civil Procedure does not require that banks send the notice at any particular time; instead, it prohibits banks from filing for foreclosure until…
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Does the “grace period notice” requirement apply to business loans as well as consumer mortgage loans?
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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 Code of Civil Procedure requires that “if a mortgage secured by residential real estate becomes delinquent by more than 30 days the mortgagee shall send via…
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Do we have to send out the 30-day Grace Period Notice if we do not intend to file a foreclosure 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 Code of Civil Procedure requires that “if a mortgage secured by residential real estate becomes delinquent by more than 30 days the mortgagee shall send via…
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Is the topic of post-maturity interest rates (also known as default rates) addressed in Illinois law?
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The Illinois Interest Act does address default rates. Section 4.1a states that default rates are limited to five-percent of the installment amount and that they cannot be charged until ten days after default. 815 ILCS 205/4.1a(f). However, we do not believe that the restrictions on interest rates and charges in the Interest Act apply to…
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Our attorney told us that the bank cannot send letters to delinquent debtors directly and that such letters must come from a debt collector or an attorney. Is that true?
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No. We are not aware of any laws or regulations that would require an attorney to perform all collection efforts on behalf of a bank, and we do not believe that a bank acting in its own name would be subject to any non-criminal laws restricting debt collection practices (though it would probably be a…