February 9, 2016
One of the biggest complaints about the foreclosure process involves the length of time it can take for the lender to take ownership of a foreclosed property. This is important for many reasons, but delays in transfer of ownership can also result in delays in a borrower’s ability to become a property owner once more later down the line.
The FHA and HUD have issued a mortgagee letter addressing this issue where FHA Title II and Reverse Mortgages are concerned. “Single Family Foreclosure Policy and Procedural Changes for HUD Title II Forward Mortgages and Reverse Mortgages” updates “Reasonable Diligence time frames” effective for all cases where the deadline for taking “First Legal Action to initiate foreclosure” occurs on or after January 1, 2016, according to the FHA/HUD official site.
According to the mortgagee letter, when foreclosure is required, lenders must exercise reasonable diligence in prosecuting the foreclosure proceedings to completion and in acquiring title to and possession of the property. HUD will, the letter states, “make available to mortgagees a time frame that constitutes ‘reasonable diligence’ for each state.”
The Reasonable Diligence time frame begins with what HUD describes as the “First Legal Action” to initiate the foreclosure, and ends with “the later date of acquiring good marketable title and possession of the property (i.e., assuming occupied conveyance has not been approved).” Furthermore, HUD expects lenders to comply with federal, state and local laws when “prosecuting a foreclosure and pursuing a possessory action”.
Since state law may affect foreclosure processes differently from state to state, HUD will issue guidance appropriate for each area. There are certain changes/updates mentioned in the new mortgagee letter, for example, specifically for the District of Columbia, and according to the mortgagee letter, there are differing time frames depending on the state for what constitutes “reasonable” diligence in proceeding.
We will have further coverage of this important development in a future blog post.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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