Homeownership Counseling Act

Here’s another stumbling block for lenders in the foreclosure process.  12 U.S.C. 1701x(c) also known as the Homeownership Counseling Act notification requirements requires the following:

Applicability

All creditors that service loans secured by a mortgage or lien on a one-family residence (home loans) are subject to the homeownership counseling notification requirements. Home loans include conventional mortgage loans and loans insured by the Department of Housing and Urban Development (HUD).

Notice Requirements

A creditor must provide notification of the availability of homeownership counseling to a homeowner, eligible for counseling, who fails to pay any amount by the due date under the terms of the home loan.

Contents of Notice

The notice must:

• notify the homeowner of the availability of any homeownership counseling offered by the creditor; and
• provide either a list of HUD-approved nonprofit homeownership counseling organizations or the toll-free number HUD has established through which a list of such organizations may be obtained

Timing of Notice

The notice must be given to a delinquent homeowner borrower no later than 45 days after the date on which the homeowner becomes delinquent. If, within the 45-day period, the borrower brings the loan current again, no notification is required.

Looks like borrowers who are going through foreclosure have another defense in that foreclosing lenders are not providing the required notice within forty-five days of default as required by 12 U.S.C. 1701x(c)(5).  In the Order Denying Motion for Summary Judgment in Deutsche Bank v. Ray (No. 16-2005-CA-4237, 4th Cir Fla), the Court stated:

“The Court finds that the pleadings and affidavits filed herein as to Defendant Yolanda Ray’s affirmative defense create genuine issues of material fact which preclude the granting of Plaintiffs motion.”

Did you receive your required “Homeownership Counseling Act” notice within forty-five days of delinquency as required by 12 U.S.C. 1701x(c)?

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.