Notice of Default Counseling Letter Requirement
by Mary Beth Guard
Question: I've heard mixed reports about whether or not the Notice of Default Counseling is, again, required. Do you have a sample letter I could use? The article only references the phone number for the customer to call. I thought the letter had to contain certain verbiage to be in compliance. Please advise.
Answer: The Homeownership Counseling requirement (which requires institutions to notify delinquent home mortgage borrowers of the availability of homeownership counseling, in an effort to assist them in trying to remedy the delinquency) has been such a frustrating one to comply with because it has been on-again, off-again several times. Typically, when it is passed, it has a sunset provision in it that causes the requirement to expire on a particular date. Then, in the past, they have resurrected the requirement by including it in some big federal piece of legislation where it has gone unnoticed for a while after its passage. In November, 2001, Congress extended it again -- and this time they omitted any reference to a sunset date, thus making it essentially permanent.
The format of the notice is largely is left to the judgment of the lender, but I would suggest you may want to have simple wording that states something like the following:
"The Department of Housing and Urban Development offers counseling for homeowners whose mortgage loans have become delinquent. This counseling could help you avoid foreclosure, and you are urged to seek it.
To find a homeownership counseling agency near you, please call 1-800-569-4287."
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