If a demand letter is sent and foreclosure has started, can you refuse payments that do not cure the full default? I know under our state rules you could, and I don't believe the rule under RESPA prohibits it, but my concern would be that it could be considered unfair if we do not.

This is a question that should be directed to the legal counsel handling the foreclosure process for the bank.

I find that most legal counsel handling foreclosures avoid making opinions on UDAP.

You are in the middle of a legal proceeding - I fail to see how a UDAP comes into play. They either can cure and stop of the foreclosure, or they cannot. I am not sure how not allowing them to do anything in between the two choices could be considered a UDAP.

Since RESPA allows for them to really run up to 119 days past due could it be considered unfair to not let them make a payment to go from 120 days to 90 days past due?

RESPA allows them 120 days before you can begin foreclosure proceedings. You have already began those procedures so as Randy said you either allow them to cure or not to cure...that is the question for your legal counsel as to whether you accept a partial payments during the process.

What if a 30-demand letter is sent at 90 days requiring them to cure the default within 30 days would it be an issue to refuse anything not curing the entire default during the 30 days. Technically in this scenario the foreclosure proceedings have not started.

If that demand letter is required to be sent to begin the foreclosure process in your State, that would violate TILA. You cannot send it until they are 120 days past due. And you need to ask that question of your legal counsel. This is not a compliance issue.

If this is outside of the foreclosure process, then not allowing them to stay within the 120 days past due period would not only be a UDAP, but likely violates any contractual agreements that exist. This too is a question for your legal counsel.

Otherwise, why don't you say, once you are at least one day late, you have to bring your account current for us to accept a payment.