Does the HUD Counseling Notice and the SCRA Notice both apply only to loans secured by a principal residence?

Under 12 U.S.C. Code 1701x, which is where the notice requirement is found, I find in the definitions section:

(6) DefinitionsFor purposes of this subsection:
(A) The term “creditor” means a person or entity that is servicing a home loan on behalf of itself or another person or entity.
(B) The term “eligible homeowner” means a homeowner eligible for counseling under paragraph (4).
(C) The term “home loan” means a loan secured by a mortgage or lien on residential property.
(D) The term “homeowner” means a person who is obligated under a home loan.
(E) The term “residential property” means a 1-family residence, including a 1-family unit in a condominium project, a membership interest and occupancy agreement in a cooperative housing project, and a manufactured home and the lot on which the home is situated.

So it appears to apply to any loan secured by a lien on a house.....not just principal residences.

Feedback please? Do we send the HUD & SCRA notice for ALL past due loans secured by ANY residential real property.....NOT just loans secured by a primary residence?

HUD Notice

Statutory Overview - Applicability

All creditors that service loans secured by a mortgage or lien on a one-family residence (home loans) are subject to the homeownership counseling notification requirements. Home loans include conventional mortgage loans and loans insured by the Department of Housing and Urban Development (HUD). In addition, the original purpose of the loan is not relevant to the notification requirement. Therefore, a mortgage on the primary residence or a commercial or agriculture loan that includes the primary residence as collateral would also be subject to this notification requirement.

Yes, I read that, and it DOES speak to the purpose of the loan...purpose doesn't matter. But the examples refer to primary residence. So my question is.....does the notice provision only apply to loans secured by a primary residence (regardless of purpose), or does it also apply to loans secured by any residential property as per the definition I cited above?

I am afraid we may be doing this wrong.

Soooo.....can anyone answer the above question?......trying to determine loan types for which to send the notice.

As far as I can tell - the recap included in the FDIC exam manual is the only reference that I can find to primary residence. The actual law that you quote surely does not.

The original HUD Mortgagee Letter 2006-28 indicates that the letter be sent to all homeowners who are in default on a residential mortgage. The FHA Handbook 4000.1(III)(A)(2)(h), which supersedes ML2006-28, indicates that the mortgagee must sent the SCRA notice to all borrowers in default on a residential mortgage. However, OCC Bulletin 2016-20 indicates that in it must be send to borrowers with a mortgage on their principal residence.

Also, SCRA (the law) does not differentiate between principal residence and investment property. Section 3953(a) states "applies only to an obligation on real or personal property owned by a servicemember."

I would send it and not split hairs over "principal" as if someone is overseas and in government housing for the last say 8 years, is the rental home back in the states a "principal" residence? What if that home had been rented every month for the last 8 years and the borrower is now living in a home they just bought in another state? Now, they have that other home up for sale, are retiring and plan to live in the home you have financed?

Lots of possibilities you won't have any idea about. Sending the letter can be automated and has zero risk when sent, and more risk if it is not.

Thanks, people!