Rescheduling Foreclosure Sales Under Reg X

In a new post on the NAFCU Compliance Blog, Regulatory Compliance Counsel David Park discusses one of the two foreclosure prohibitions contained in the loss mitigation rules – section 1024.41(g) in Regulation X – as interpreted by the U.S. Court of Appeals for the Eleventh Circuit decision in Landau v. Roundpoint Mortgage Servicing Corporation.

Park highlights that if a complete loss mitigation application is submitted to the servicer following the first notice or filing in a foreclosure process, a servicer is generally prohibited from moving for judgment or conducting a foreclosure sale under section 1024.41(g) unless:

a servicer notifies the borrower that the borrower does not qualify for any loss mitigation options and any available appeal process has expired;
the borrower rejects all loss mitigation options that have been offered; or
the borrower breaches a loss mitigation agreement.

“Section 1024.41(b) explains that a complete loss mitigation application is one in which a servicer ‘has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower,'” writes Park.

In the blog, Park also discusses the implications of the court case for financial service providers.

“This case, and others like it, may provide some cover for credit unions that are trying to thread the needle in balancing their obligations under the loss mitigation rules in section 1024.41 and enforcing judicial orders that have already been issued,” he adds. “One thing to note is that the 11th Circuit only covers federal district courts in Alabama, Florida, and Georgia.”

For more on loss mitigation under Regulation x, read Park’s blog. Sign up to receive new NAFCU Compliance Blog posts in your inbox every Monday, Wednesday, and Friday, courtesy of NAFCU’s award-winning compliance team.