Homeownership Counseling Act/SCRA - HELP!

Can someone clarify once and for all.... so there is the SCRA notice (HUD-92070) that must be sent *and* within 45 days of default, the bank must send notice of availability of any homeownership counseling offered by the bank and the availability of any homeownership counseling by nonprofit organizations approved by HUD or the toll-free telephone number (1-800-569-4287) through which the homeowner can obtain a list of such organizations. My understanding is the latter can be accomplished by using this notice (or including info on late notice) https://www.hud.gov/sites/documents/9692-HC.PDF

Is that right? What is the timing of the SCRA notice (HUD-92070)?

They are the same and most lenders just send them both at the same time.

Can you help me understand how they are the same when they have two different phone numbers to call? Or are you saying that many lenders combine the two or send both at the same time? Sounds like there is a requirement to provide the # to HUD and provide info on SCRA relief, right?

HUD's Housing Counseling Agency Locator (800-569-4287)
Military One Source (800-342-9647)

Yes, I meant the deliver requirements are basically the same and lenders just typically send both at the same time.

Where can I locate the regulatory requirements for sending the HUD and SCRA notices?

HUD: https://www.fdic.gov/regulations/laws/rules/8000-4400.html

Not sure the exact citation for the SCRA notice.

Thank you. So the HUD section states, to notify "the homeowner or mortgage applicant"....so does this mean this notice goes out to all applicants, consumer or business? Or is this limited to RRE? Who exactly is the target audience with this? We've recently changed core providers, so I want to be sure the parameters for generating the notice are correct. Thanks!

See C(4): https://www.law.cornell.edu/uscode/text/12/1701x

Can you explain in plain English? So notice should be sent out on all delinquent mortgage loans - regardless of who the borrower is?

Make is easy on yourself - you send past due notices to the address of record of the borrower - right? Send it there - that is what every other bank does. It does not apply to commercial loans.

Randy, based on this 2013 webinar from the FRB, it appears commercial loans could be included if secured by a servicemembers principal residence: https://consumercomplianceoutlook.org/2013/first-quarter/servicemember-financial-protection-webinar/

Homeownership Counseling Act
According to HUD’s Mortgage Letter 2006-28, the SCRA notice is to be sent to all homeowners who are delinquent on a residential mortgage. Could you please clarify what meets the definition of a “residential mortgage”? It clearly includes conventional mortgages and mortgages insured by the Department of Housing and Urban Development (HUD). But does it include junior lien mortgages (home equity loans/lines) and business loans that have a guarantor who gives the bank a mortgage on his or her personal residence? In other words, should the bank send the notice to any individual homeowner with a mortgage on a single-family residence regardless of lien status or purpose?

The SCRA notice requirement at issue, imposed by the Homeownership Counseling Act (12 U.S.C. §1701X(c)(5)(A)), applies to loans secured by a mortgage or lien on the principal residence of the person to whom the notice must be given — whether open- or closed-end, first- or second-lien, business purpose or consumer purpose. The notice requirement is generally triggered when a borrower applies for, or defaults on, a home loan, defined as “a loan secured by a mortgage or lien on residential property” secured by the borrower’s or the applicant’s principal residence.

No disagreement - sort of meant that to mean non-primary residences - should have been more clear.

Great, thanks. I thought we had folks overcomplying {shudder}. Have a great weekend!

WE are a small servicer and have foreign nationals loans secured by second homes, Our notices for servicemember and homeownership counseling are together, would you be criticized for sending out a notice that does not apply to foreign nationals (servicemember).

No

A foreign national can join the military, and could be protected.

The HUD citation contains a requirement for the SCRA piece as well. There isn't a specific requirement for a notice in the SCRA regulation itself that I am aware of. I came across something recently on the content requirements of the HUD notice that there is supposed to be reference to certain "mortgage software systems," but I have never heard or seen in practicality what that consists of. There is nothing of this nature on the "model" form I know of. Is anybody referencing mortgage software systems in their HUD delinquency notice?

https://www.fdic.gov/resources/supe...examination-manual/documents/5/v-4-1.pdf

Contents of Notice
The notice must:
• notify the homeowner of the availability of any homeownership counseling offered by the creditor;
• provide either a list of HUD-approved nonprofit homeownership counseling organizations or the toll-free number HUD has established through which a list of such organizations may be obtained;
• if applicable, notify the homeowner by a statement or notice, written in plain English by the Secretary of Housing and Urban Development, in consultation with the Secretary of Defense and the Secretary of Treasury, explaining the mortgage and foreclosure rights of servicemembers, and the dependents of such servicemembers, under the Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.), including the toll-free military one source number to call if servicemembers, or the dependents of such servicemembers, require further assistance; and
• notify the housing or mortgage applicant of the availability of mortgage software systems provided pursuant to subsection (g)(3).

You have to go to the Act itself. There has never been any money appropriated for such a system.

‘‘(D) Budget compliance
‘‘This paragraph shall be effective only to the extent that amounts to carry out this paragraph are made available in advance in appropriations Acts.

Great, lol. I saw that subsection on Budget and just kind of skipped over it thinking it was irrelevant. Who would would have thought? I wonder why the FDIC includes it in the exam manual as a required part of the content without mentioning it is not currently applicable.

Probably because whoever wrote the manual didn't know that no funds had been allocated to fund such a system.

Tagging onto this thread for additional clarification of "home loan". We recently acquired a manufactured housing division and found they are not providing these notices. The division originates loans secured by MH and land as well as MH-only loans. Would the MH-only loans be subject to this rule? Everything I am finding seems to include reference to land, but wanted to make sure as they could be primary dwellings.

Wouldn't you still send the SCRA HUD notice if a residence was taken as collateral on a commercial loan in case the owner of the property is a active service member.