www.hudclips.org 


U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

February 14, 1990
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
Mortgagee letter 90-4
      TO:  ALL APPROVED MORTGAGEES
      ATTENTION:  SERVICING MANAGERS (Single Family)
      SUBJECT:  Implementation of New Foreclosure Time Frames
 
           Mortgagee Letter 88-32 notified lenders that there are
      serious delays in foreclosure processing not withstanding the
      reasonable diligence requirement of HUD regulation at 24 CFR
      203.356.  Our study of the delays has been completed and we are
      implementing a procedural change designed to encourage
      mortgagees to be more diligent in completing foreclosure
      proceedings.
 
      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.
 
      STATE             MONTHS  STATE      MONTHS  STATE            MONTHS
 
      Alabama           4   Kentucky        7  North Dakota         1O
      Alaska            7   Louisiana       4  Ohio                 1O
      Arkansas          5   Maine          22  Oklahoma              7
      Arizona           3   Maryland        6  Oregon                7
      California        7   Massachusetts   8  Pennsylvania          9
      Colorado          7   Michigan        9  Puerto Rico          12
      Connecticut       9   Minnesota      12  Rhode Island          3
      Delaware          8   Mississippi     4  South Carolina        7
      Dist. of Columbia 6   Missouri        3  South Dakota         lO
      Florida           7   Montana         9  Tennessee             4
      Georgia           4   Nebraska        4  Texas                 3
      Hawaii            7   Nevada          7  Utah                  5
      Idaho             9   New Hampshire   4  Vermont              17
      Illinois          9   New Jersey     12  Virginia              5
      Indiana          12   New Mexico      6  Washington            5
      Iowa             17   New York       13  West Virginia         5
      Kansas           l0   North Carolina  5  Wisconsin            12
                                               Wyoming               6
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      Completion of forecIosure 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   2O3.4O2(k)  , unless the delay was beyond the
control of the mortgagee.  Where the mortgagee has exceeded the time
frame without acceptable cause, debenture interest will be curtailed
to the date which the foreclosure should have been completed.
 
      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 shall be considered to be the
date on which the Sheriff's, Trustee's, etc. deed is recorded.
 
      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 unfeasibe 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.  Under the
existing claim payment system, 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.  The Department's
implementation of foreclosure timeframes does not alter or affect
existing instructions for claim preparation or submission.
 
      Supporting documentation such as attorney's correspondence or
copies of court records must be retained in the claim review file.
The cause of the delay and the documentation will be examined for
justification at the time of the onsite claims review.  If not
justified, the mortgagee will be required to refund to HUD any
unearned debenture interest.
 
      The requirements of this Mortgagee Letter shall apply to all
foreclosure actions commenced on or after March 1, 1990.
 
                                Sincerely yours,
 
                                Assistant Secretary for Housing
                                Federal Housing Commissioner
 
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