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#2151849 - 10/31/17 08:27 PM 120 day rule when borrower abandons property
BSAguy Offline
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Kansas
Does the bank have to wait for 120 days when the borrower has abandoned the property? I can't find anything that lets us start earlier in this case which doesn't make sense.

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Mortgage Servicing Rules
#2151856 - 10/31/17 08:53 PM Re: 120 day rule when borrower abandons property BSAguy
rlcarey Offline
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What does your note say? Is abandonment a term of default? If so you need to call the loan and wait 120 days or wait until 120 days past due whichever comes first.
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#2151993 - 11/01/17 08:20 PM Re: 120 day rule when borrower abandons property BSAguy
John Burnett Offline
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Would the abandoned property cease under state law to be the borrower's principal residence? Read Regulation X comment 30(c)(2)-1, but pay attention to the caveat that it depends on "specific facts and circumstances regarding the property and applicable State law."

If the property is no longer the borrower's principal residence under State law, the 120-day delay provision would no longer apply.

This is a matter to discuss with a local real estate law adviser.
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#2152259 - 11/03/17 02:25 PM Re: 120 day rule when borrower abandons property BSAguy
BSAguy Offline
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Thank you for that info John.

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#2156465 - 12/07/17 05:28 PM Re: 120 day rule when borrower abandons property BSAguy
Parluc Offline
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I have this question too about calling a loan. What if the borrower is constantly running 60 to 90 days past due and makes payment just in time to avoid going non-accrual. The borrower has forced placed hazard insurance so the principal balance on the loan is increasing yearly. He never makes a payment without a phone call in get it.

Can I send him a Acceleration Letter and call the loan and wait for the 120 day to start foreclosure?

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#2156466 - 12/07/17 05:35 PM Re: 120 day rule when borrower abandons property BSAguy
rlcarey Offline
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Theoretically, yes - but that is a question for your legal counsel.
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#2156493 - 12/07/17 07:07 PM Re: 120 day rule when borrower abandons property BSAguy
Parluc Offline
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Good News! Thank you rlcarey!! Thanks!

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#2157208 - 12/13/17 10:51 PM Re: 120 day rule when borrower abandons property BSAguy
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We have a similar situation, the borrower lives in another state, the house is empty and listed for sale. Borrower is currently 99 days past due. He'll bring the loan current around the 110-115 day mark. We've been paying property taxes, and forced hazard insurance and increasing the balance. Since it's not his primary residence, we can start foreclosure prior to 120 days? I feel like I'm missing a step??

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#2157209 - 12/13/17 10:58 PM Re: 120 day rule when borrower abandons property BSAguy
rlcarey Offline
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Galveston, TX
A mortgage loan in the RESPA servicing section is not defined by primary residence:

1024.31Mortgage loan means any federally related mortgage loan, as that term is defined in § 1024.2 subject to the exemptions in § 1024.5(b), but does not include open-end lines of credit (home equity plans).

Call the loan since I am sure non-payment of insurance and property taxes (check with our legal counsel) puts the loan in default and wait 120 days or until it goes 120 days delinquent.
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#2157236 - 12/14/17 02:36 PM Re: 120 day rule when borrower abandons property rlcarey
Inherent_Risk Offline
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Foreclosure provisions only apply to principle residence though. If it's not a principle residence I don't believe the 120 day clock in 1024.41 applies.

1024.30(c)(2) The procedures set forth in §§ 1024.39 through 41 of this subpart only apply to a mortgage loan that is secured by a property that is a borrower's principal residence.

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#2157240 - 12/14/17 02:41 PM Re: 120 day rule when borrower abandons property BSAguy
rlcarey Offline
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Galveston, TX
Nice catch.
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#2157440 - 12/15/17 05:15 PM Re: 120 day rule when borrower abandons property BSAguy
John Burnett Offline
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Don't forget that the Bureau has added a comment to Regulation X that addresses your question. It's comment 30(c)(2)-1, added effective October 19, 2017, concerning the loss of principal residence status.


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.



In my webinar on the New Servicing Rules, I offered this additional information --

"One example of a vacant property that may still be the borrower's principal residence is a property owned by a servicemember who has been deployed or reassigned to a duty station remote from the property, and the servicemember has chosen not to sell the property.

"This paragraph of commentary is one that servicers should discuss with their legal counsel."
Last edited by John Burnett; 12/15/17 05:17 PM.
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#2157505 - 12/15/17 11:41 PM Re: 120 day rule when borrower abandons property BSAguy
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Great information, thank you!

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#2264521 - 01/10/22 05:07 PM Re: 120 day rule when borrower abandons property BA13
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Will you please assist in the following scenario?
Let’s say a borrower who occupied the property as his primary residence died. The payments went delinquent and the bank identifies a Successor in Interest. If the Successor in Interest does not occupy the dwelling as a primary residence, does the 120-rule apply?

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#2264523 - 01/10/22 05:20 PM Re: 120 day rule when borrower abandons property BSAguy
rlcarey Offline
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Technically not.

30(d) Successors in interest.
1. Treatment of confirmed successors in interest. Under § 1024.30(d), a confirmed successor in interest must be considered a borrower for purposes of this subpart and § 1024.17, regardless of whether the successor in interest assumes the mortgage loan obligation under State law. For example, if a servicer receives a loss mitigation application from a confirmed successor in interest, the servicer must review and evaluate the application and notify the confirmed successor in interest in accordance with the procedures set forth in § 1024.41 if the property is the confirmed successor in interest’s principal residence and the procedures set forth in § 1024.41 are otherwise applicable.

But the regulators expect you to go out of your way to work with a SII. If they are not being cooperative with you, I still might give it 120 days before pulling the trigger.
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#2264540 - 01/10/22 08:28 PM Re: 120 day rule when borrower abandons property rlcarey
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Randy, thanks and I appreciate the advice.

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