www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 August 30, 1991 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER MORTGAGEE LETTER 91-41 TO: ALL APPROVED MORTGAGEES ATTENTION: Single Family Servicing Managers SUBJECT: First Legal Action to Commence (Institute) Foreclosure A mortgagee is required by 24 CFR 203.355 to commence foreclosure (the first legal action to foreclose) within one year from the date of default or if applicable, 60 days after the lifting of a prohibition established by state law. (Even though the mortgagor files for bankruptcy under Federal law, for purposes of this regulation, HUD considers release of stay as the lifting of a prohibition established by state law.) When mortgagees fail to meet this time requirement, debenture interest on an insurance claim will be curtailed. "Commencement of Foreclosure" for HUD's purposes 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. Merely posting notice on the premises does not constitute commencement of foreclosure and is not sufficient to satisfy HUD's regulatory requirement. Also, although in some states the mailing of a Notice of Default may be an action required by law, it is not a public action and does not meet HUD's definition of the first legal action to commence foreclosure. The action must be established as a public record through a filing or recording, or the notice of sale must be published in a newspaper of general circulation as required by law. This mortgagee letter provides mortgagees with a list of actions the Department currently considers as the first legal action to commence foreclosure. (See Attached List) The Department will from time to time update this listing, however, it is the mortgagees' responsibility to keep informed of any changes in state law which may result in a revision to these events. In the event a method of foreclosure is used which is not the norm in a particular state, and the first action is not contained in the attached list, the mortgagee should ensure that the date identified as the commencement of foreclosure when filing an insurance claim meets the criteria as stated above. If you have any questions, please contact your local HUD Office. Sincerely yours, Arthur J. Hill Assistant Secretary for Housing-Federal Housing Commissioner Attachment _____________________________________________________________________ ACTION CONSIDERED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AS THE FIRST LEGAL ACTION TO COMMENCE (INSTITUTE) FORECLOSURE ___________________________________________________________________________ TYPICAL TYPE OF HUD NORMAL STATE SECURITY METHOD OF CODE STATE INSTRUMENT FORECLOSURE __________________________________________________________________ 01 Alabama Mortage Non-Judicial 11 Alaska Deed of Trust Non-Judicial 02 Arizona Deed of Trust Non-Judicial 03 Arkansas Deed of Trust Non-Judicial 04 California Deed of Trust Non-Judicial 05 Colorado Deed of Trust Non-Judicial 06 Connecticut Mortgage Judicial 07 Delaware Mortgage Judicial 08 District of Columbia Deed of Trust Non-Judicial 09 Florida Mortgage Judicial 10 Georgia Security Deed Non-Judicial 14 Hawaii Mortgage Judicial 12 Idaho Deed of Trust Non-Judicial 13 Illinois Mortgage Judicial 15 Indiana Mortgage Judicial 16 Iowa Mortgage Judicial 18 Kansas Mortgage Judicial 20 Kentucky Mortgage Judicial 22 Louisiana Mortgage Judicial 23 Maine Mortgage Judicial 24 Maryland Mortgage Judicial Deed of Trust Non-Judicial 25 Massachusetts Mortgage Non-Judicial 26 Michigan Mortgage Non-Judicial 27 Minnesota Mortgage Deed Non-Judicial 28 Mississippi Deed of Trust Non-Judicial 29 Missouri Deed of Trust Non-Judicial ___________________________________________________________________________ _____________________________________________________________________ ACTION CONSIDERED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AS THE FIRST LEGAL ACTION TO COMMENCE (INSTITUTE) FORECLOSURE ___________________________________________________________________________ TYPICAL TYPE OF HUD FIRST STATE SECURITY FORECLOSURE CODE STATE INSTRUMENT ACTION ___________________________________________________________________________ 01 Alabama Mortage Publication 11 Alaska Deed of Trust Recording of Notice of Default 02 Arizona Deed of Trust Recording of Notice of Sale 03 Arkansas Deed of Trust Recording of Notice of Default 04 California Deed of Trust Recording of Notice of Default 05 Colorado Deed of Trust Recording of Notice of Election and Demand for Sale 06 Connecticut Mortgage Complaint 07 Delaware Mortgage Complaint 08 District of Columbia Deed of Trust Recording of Notice of Default 09 Florida Mortgage Complaint 10 Georgia Security Deed Publication 14 Hawaii Mortgage Complaint 12 Idaho Deed of Trust Recording of Notice of Default 13 Illinois Mortgage Complaint 15 Indiana Mortgage Complaint 16 Iowa Mortgage Petition 18 Kansas Mortgage Complaint 20 Kentucky Mortgage Complaint 22 Louisiana Mortgage Petition for Executory Process 23 Maine Mortgage Complaint 24 Maryland Mortgage Petition in Equity Deed of Trust Filing an Order to Docket 25 Massachusetts Mortgage Publication 26 Michigan Mortgage Publication 27 Minnesota Mortgage Deed Publication 28 Mississippi Deed of Trust Publication 29 Missouri Deed of Trust Publication ___________________________________________________________________________ _____________________________________________________________________ ACTION CONSIDERED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AS THE FIRST LEGAL ACTION TO COMMENCE (INSTITUTE) FORECLOSURE ___________________________________________________________________________ TYPICAL TYPE OF HUD NORMAL STATE SECURITY METHOD OF CODE STATE INSTRUMENT FORECLOSURE ____________________________________________________________________ 31 Montana Trust Indenture Non-Judicial 32 Nebraska Mortgage Judicial 33 Nevada Deed of Trust Non-Judicial 34 New Hampshire Mortgage Non-Judicial 35 New Jersey Mortgage Judicial 36 New Mexico Mortgage Judicial 37 New York Mortgage Judicial 38 North Carolina Deed of Trust Non-Judicial 40 North Dakota Mortgage Judicial 41 Ohio Mortgage Deed Judicial 42 Oklahoma Mortgage Judicial 43 Oregon Deed of Trust Non-Judicial 44 Pennsylvania Mortgage Judicial 45 Rhode Island Mortgage Non-Judicial 46 South Carolina Mortgage Judicial 47 South Dakota Mortgage Judicial 48 Tennessee Deed of Trust Non-Judicial 49 Texas Deed of Trust Non-Judicial 52 Utah Mortgage Judicial Deed of Trust Non-Judicial 53 Vermont Mortgage Judicial 54 Virginia Deed of Trust Non-Judicial 56 Washington Mortgage or Judicial Deed of Trust Non-Judicial 57 West Virginia Deed of Trust Non-Judicial 58 Wisconsin Mortgage Judicial 59 Wyoming Mortgage Non-Judicial 50 Puerto Rico Mortgage Judicial ___________________________________________________________________________ _____________________________________________________________________ ACTION CONSIDERED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AS THE FIRST LEGAL ACTION TO COMMENCE (INSTITUTE) FORECLOSURE ___________________________________________________________________________ TYPICAL TYPE OF HUD FIRST STATE SECURITY FORECLOSURE CODE STATE INSTRUMENT ACTION ___________________________________________________________________________ 31 Montana Trust Indenture Recording of Notice of Sale 32 Nebraska Mortgage Petition 33 Nevada Deed of Trust Recording of Notice of Default 34 New Hampshire Mortgage Publication 35 New Jersey Mortgage Complaint 36 New Mexico Mortgage Complaint 37 New York Mortgage Complaint 38 North Carolina Deed of Trust Notice of Hearing 40 North Dakota Mortgage Complaint 41 Ohio Mortgage Deed Complaint 42 Oklahoma Mortgage Petition 43 Oregon Deed of Trust Recording of Notice of Default 44 Pennsylvania Mortgage Complaint 45 Rhode Island Mortgage Publication 46 South Carolina Mortgage Complaint 47 South Dakota Mortgage Complaint 48 Tennessee Deed of Trust Publication 49 Texas Deed of Trust Recording of Notice of Sale 52 Utah Mortgage Complaint Deed of Trust Recording of Notice of Default 53 Vermont Mortgage Complaint 54 Virginia Deed of Trust Publication 56 Washington Mortgage or Complaint Deed of Trust Recording of Notice of Sale 57 West Virginia Deed of Trust Publication 58 Wisconsin Mortgage Complaint 59 Wyoming Mortgage Publication 50 Puerto Rico Mortgage Complaint ___________________________________________________________________________