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#1966785 - 10/03/14 01:14 PM Foreclosure Question
Piano Man Offline
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Piano Man
Joined: Mar 2004
Posts: 442
Down South
We have a loan that was for business purpose to refinance rental property. The bank has started foreclosure since the property securing the note was a rental. However, the customer is now living in the property and it is not 120 days delinquent. Are we required to stop our foreclosure process, and if we are required to stop, can we request the customer bring the loan current and pay legal fees associated with the foreclosure process?
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Mortgage Servicing Rules
#1966796 - 10/03/14 01:33 PM Re: Foreclosure Question Piano Man
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,303
Galveston, TX
They cannot forestall foreclosure by moving into the property in the middle of the foreclosure process. The loan, I assume was not originally subject to either RESPA or TILA.
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#1966818 - 10/03/14 01:56 PM Re: Foreclosure Question Piano Man
Piano Man Offline
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Piano Man
Joined: Mar 2004
Posts: 442
Down South
No the loan was not subject to RESPA or TIL, but we are unsure when the customer moved into the property. We found out from a third party after foreclosure was started.
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#1966844 - 10/03/14 02:21 PM Re: Foreclosure Question Piano Man
John Burnett Offline
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John Burnett
Joined: Oct 2000
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Cape Cod
Unless state law affects your options, the fact that the loan is not subject to RESPA means that none of the RESPA/Regulation X provisions apply to your foreclosure process, regardless of the fact the owner has moved in.
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#2268319 - 03/28/22 09:42 PM Re: Foreclosure Question John Burnett
Compliance NABW Offline
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Joined: Oct 2015
Posts: 1,597
What about the opposite scenario, i.e. it started out subject to RESPA, but then became a rental property?

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#2268321 - 03/29/22 10:55 AM Re: Foreclosure Question Piano Man
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,303
Galveston, TX
Official Interpretation
Paragraph 30(c)(2).
1. Principal residence. If a property ceases to be a borrower’s principal residence, the procedures set forth in §§ 1024.39 through 1024.41 do not apply to a mortgage loan secured by that property. Determination of principal residence status will depend on the specific facts and circumstances regarding the property and applicable State law. For example, a vacant property may still be a borrower’s principal residence.
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#2268332 - 03/29/22 02:09 PM Re: Foreclosure Question Piano Man
Compliance NABW Offline
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Thank you for the reference

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#2268364 - 03/29/22 07:58 PM Re: Foreclosure Question Piano Man
Irishguy Offline
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Irishguy
Joined: Aug 2008
Posts: 585
Kentucky
If it started out as a principal residence and then switched to a rental, you might have a breach of contract at that point if no notification was provided to you.

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