www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSlONER Mortgagee Letter 88-32 TO: ALL APPROVED MORTGAGEES SUBJECT: Lender Foreclosure Delays HUD Regulation 203.356 requires lenders to exercise reasonable diligence in pursuing foreclosure proceedings to completion. However, it has been noted that there are serious delays in lender foreclosure processing. Due to our concerns about this matter we are conducting a study nationwide, with input from the Mortgage Bankers Association (MBA), to determine what actions HUD should take in this area. In the meantime, until the study is completed, the interim procedures provided in this letter must be followed. We realize that specific processing time frames between initiation of foreclosure and deed conveyance vary from state-to- state as well as within a state. Furthermore, the different methods of foreclosure (Power of Sale, Judicial, entry and possession and strict foreclosure) contribute to the processing times. Additionally, time frames may be delayed due to circumstances (bankruptcy proceedings, redemption periods, guardianship, and insolvency proceedings) over which a lender has no control. All of those circumstances will be taken under consideration prior to any actions being taken. HUD Field Offices will be monitoring more closely foreclosure processing time frames. This will be accomplished on a case-by-case basis during on-site reviews. If it is discovered that reasonable diligence is not being pursued in accordance with HUD Regulation 203.356, and foreclosure delays exist, a deficiency in this area will be rendered. Lenders will be requested to provide written documentation to justify why the delay occurred. Lenders who are unable to provide the required documentation may be requested to reimburse this Department for debenture interest paid by HUD for the period after "the particular required action should have been taken." As soon as our study is completed, we will forward a letter to all lenders concerning the final procedures. If you have any question concerning this letter, please contact the Single Family Insured Servicing Branch at (202) 755-7330. Sincerely yours, Thomas T. Demery Assistant Secretary