I'm not sure where they're getting this brochure requirement from.
I just went back and reviewed what I've written over the years about this requirement, starting in 1990. Originally, the requirement was that when a loan secured by a 1 to 4 family dwelling became delinquent due to a reduction in income of the homeowner, the homeowner was required to be notified by the lender (or the entity servicing the loan) of the availability of homeownership counseling. Due to problems in ascertaining the cause of the delinquency, HUD suggests that you may want to furnish the notice in any case where this type of loan becomes delinquent. And, if the loan is brought current and then becomes delinquent again, you must furnish the notice again.
Then, in 1993, they expanded the scope of the requirement. In addition to notices of availability of homeownership counseling being provided to delinquent homeowner-borrowers, the law was changed to require that the notice be given to eligible applicants for home loans. The law states that an applicant for a mortgage is considered "eligible" if the applicant is:
-- a first-time homebuyer;
who meets the requirements of section 303(b)(1) of the Cranston-Gonzalez National Affordable Housing Act; and
-- the mortgage involves a principal obligation (including such initial service charges, appraisal, inspection, and other fees as HUD shall approve) in excess of 97 percent of the appraised value of the property; and
-- is to be insured under section 203 of the National Housing Act.
(With that high LTV ratio, this wouldn't appear to cover a large number of loans.)
In terms of delinquencies, the notice was to be provided within 45 days after the initial loan default and the lender was required to wait a reasonable period of time after sending the notice before instituting foreclosure proceedings. Since the purpose of the notice is to encourage and enable the debtor to obtain homeownership counseling that might aid him in remedying the delinquency, time should be allowed for this process to take place before foreclosure is filed.
HUD has never issued a "form" to be used for the notice, to my knowledge, and this brochure is something new.
The BIG questions now are:
-- was the legal basis for the requirement really extended, or is HUD simply hoping lenders will voluntarily continue to give the notice;
-- if it was extended by Congress, what are the guidelines?
-- does the brochure have to be provided? What is the timing? Is it the same?
-- Is the limited group of applicants still covered by the notice requirement (and not just delinquent borrowers?)
It's difficult to comply with something when you can't obtain adequate guidance about what constitutes compliance!