www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 August 14, 1990 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER MORTGAGEE LETTER 90-30 TO: ALL APPROVED MORTGAGEES ATTENTION: SERVICING MANAGERS (Single Family) SUBJECT: Update of Foreclosure Time Frames This issuance supersedes Mortgagee Letter 90-4, dated February 14, 1990. All time frames identified in this issuance will be retroactive to the effective date of Mortgagee Letter 90-4, March 1, 1990. Because the Department found serious delays in foreclosure completion, Mortgagee Letter 90-4 was issued to provide mortgagees with state by state foreclosure time frames. HUD's regulation, 24 CFR 203.356 requires mortgagees to exercise reasonable diligence in prosecuting foreclosure to completion. REASONABLE DILIGENCE Mortgagees are expected to complete foreclosure within the following time frames. Documented delays which are found to be beyond the control of the mortgagee shall be taken into consideration before any determination is made that reasonable diligence was not followed. Differences in state procedures and redemption periods will affect the length of time required to complete foreclosure therefore the required time will depend on the location of the mortgaged property. Changes to the time frames identified in Mortgagee Letter 90-4 are in bold type. STATE MONTHS STATE MONTHS STATE MONTHS Alabama 4 Kentucky 7 North Dakota 10 Alaska 7 Louisiana 6 Ohio 12 Arkansas 5 Maine 22 Oklahoma 7 Arizona 4 Maryland 6 Oregon 7 California 7 Massachusetts 8 Pennsylvania 10 Colorado 7 Michigan 9 Puerto Rico 14 Connecticut 9 Minnesota 12 Rhode Island 3 Delaware 8 Mississippi 4 South Carolina 7 District of Col. 7 Missouri 3 South Dakota 10 Florida 9 Montana 9 Tennessee 4 Georgia 4 Nebraska 6 Texas 3 Hawaii 9 Nevada 7 Utah 5 Idaho 9 New Hampshire 4 Vermont 17 Illinois 13 New Jersey 14 Virginia 5 Indiana 12 New Mexico 7 Washington 6 Iowa 17 New York 13 West Virginia 5 Kansas 12 North Carolina 5 Wisconsin 12 Wyoming 6 _____________________________________________________________________ 2 Completion of foreclosure within these time frames will be considered "reasonable diligence in prosecuting such proceedings to completion" as required by Regulation 203.356. Failure to complete the foreclosure within that time will be considered failure to meet the requirements of the regulation and cause for curtailment of debenture interest 203.402(k) , unless the delay was beyond the control of the mortgagee. The time frames are measured from the initiation to the completion of foreclosure. Initiation of foreclosure is the first public action required by law, such as filing a complaint or petition, recording a notice of default, or publication of a notice of sale. Completion of foreclosure is the date on which the Sheriff's, Trustee's, etc. deed is recorded. The deed is generally executed after the expiration of the redemption period and before eviction of the occupant. Examples of situations which HUD recognizes as circumstances beyond the control of the mortgagee include; bankruptcy petitions filed after foreclosure initiation, contests of foreclosure, overcrowded court calendars, delays in obtaining service of process, etc. HUD recognizes that prior approval to exceed these time frames would be burdensome or unfeasible for both mortgagees and Field Offices and therefore will not be required. Therefore, the justification for exceeding the time frame will be considered after foreclosure has been completed. Debenture interest will not be curtailed because of lack of reasonable diligence at the time of initial payment. The mortgagee should not request an extension of time if it is anticipated that the time frame will be exceeded but should briefly note the cause for the delay in the "Mortgagee's Comments" section on the reverse side of Part A. Supporting documentation such as attorney's correspondence or copies of court records must be retained in the claim review file. It would be impossible to attempt to identify all types of documentation which HUD would consider acceptable. However, there are several examples where the claim review file must contain specific documentation other than the attorney's correspondence. Several obvious examples are as follows: where the mortgagee identifies the pursuit of a deficiency judgment at HUD's request as the cause of the delay, the claim review file must contain a copy of HUD's request; and for bankruptcy delays, HUD believes it reasonable to require the mortgagee to maintain copies of the bankruptcy court's notifications. _____________________________________________________________________ 3 For all cases, mortgagees must ensure that the claim review file is fully documented. The cause of the delay and the documentation will be examined for justification at the time of the on-site claims review. If not justified, the mortgagee will be required to refund to HUD any unearned debenture interest. The Department will monitor both the effectiveness and appropriateness of these time frames and will periodically issue modifications as we find are warranted. The requirements of this Mortgagee Letter shall apply to all foreclosure actions commenced on or after March 1, 1990. Sincerely yours, C. Austin Fitts Assistant Secretary for Housing - Federal Housing Commissioner