HUD Updates “How to Avoid Foreclosure” Brochure Requirement
By: Krista Cooley, Kathryn M. Baugher
Out with the old, in with the “new”! The first Mortgagee Letter of 2014 has arrived, superseding the guidance contained in Mortgagee Letter 2002-14.
In Mortgagee Letter 2014-1, HUD clarifies what notice FHA-approved mortgagees must provide to delinquent mortgagors to satisfy the requirement found in 24 C.F.R. § 203.602. Under the new Mortgagee Letter, mortgagees must send delinquent borrowers the “Save Your Home: Tips to Avoid Foreclosure” brochure (HUD-2008-5-FHA) no earlier than the 32nd day of delinquency and no later than the 60th day of delinquency. This mandate replaces the previous requirement to send borrowers the “How to Avoid Foreclosure” brochure (HUD-PA-426), which has not been updated since 2001. We note that, while the requirement to send the “Save Your Home: Tips to Avoid Foreclosure” brochure is new, the brochure itself has been around for at least several years.
Mortgagees are also required to include a cover letter with the “Save Your Home: Tips to Avoid Foreclosure” brochure. The cover letter must include certain specified information, as follows:
• Information about Language Access Services. The cover letter must include “highly visible information about the availability of language access services offered by the servicer for mortgagors with limited English proficiency,” including “an advisement to seek translation or other language assistance.” The mortgagee must provide this information in Spanish, but may also provide it in other languages. We also note that the Mortgagee Letter includes links to English, Chinese, Spanish, and Vietnamese versions of the “Save Your Home: Tips to Avoid Foreclosure” brochure, but does not specify the circumstances under which the non-English versions should be provided to borrowers.
• Information Related to Payments. Mortgagees must provide the following information related to the mortgagor’s loan: “(a) number of late payments; (b) total amount of any late charges incurred; (c) the month of each late payment (e.g., June, July); and (d) the original due date of each late payment[.]”
• Request for Financial Information. In the cover letter, mortgagees must request the mortgagor’s current financial information.
• Contact Information. Finally, the cover letter must also include (a) “the servicer’s mailing address and specific contact information of any assigned personnel”; (b) “toll-free telephone numbers for mortgagors needing to contact the servicer’s loss mitigation/customer assistance personnel”; and (c) “the toll-free telephone number for mortgagors seeking information on HUD-approved housing counseling agencies, (800) 569-4287, along with the toll-free Federal Information Relay Service number of (800) 877-8339 for mortgagors who may need a Telecommunication Device for the Deaf (TDD) to call the housing counseling line.” Item (a) is a new requirement not found in Mortgagee Letter 2002-14, and parallels the Consumer Financial Protection Bureau’s requirement found at 12 C.F.R. § 1024.39(b)(2)(ii).
FHA-approved mortgagees must begin complying with the new requirements no later than February 9, 2014.