I also realized I failed to mention that both Loan A & Loan B are now in default. Our Legal is advising us that we go off of the purpose as of consummation and since Loan B's original purpose was commercial, we do not need to follow the mortgage servicing rules (i.e. loss mitigation/foreclosure rules specifically). Additionally, by that same logic, Loan A would then not be covered under the 1024.39 & 1024.41 because the collateral is no longer our customer's primary dwelling.
This just doesn't seem quite right to me, I would think that based on the facts and circumstances we should afford the mortgage rule requirements of 1024.39 & 1024.41 to Loan B because it is her primary dwelling. Maybe I'm wrong but I sure would appreciate any info you can provide.