To comply with required time frames, an Extension of Time is a tool afforded to mortgagees to assist in the initiation or completion of HUD's Loss Mitigation Program (except Preforeclosure Sales Program) and/or foreclosure action. A mortgagee is required to submit to NSC-Oklahoma City, form HUD-50012, Mortgagee's Request for Extensions of Time, prior to the expiration of the respective time frame via Fax Number (405) 609-8405.
New State Foreclosure Legislation
Reminder - The Department has been advised that due to a recent change in State Law some foreclosures had to be cancelled and rescheduled to complete all the new legislative requirements. A ninety (90) day extension to commence foreclosure is provided to those mortgages where the initial legal action to commence foreclosure has been timely and the foreclosure sale would have been conducted in the required month but was cancelled to comply with the new legislation. Mortgagees must clearly document the full chronology including this delay in their files and must also indicate this approved extension in Part A, block 19 of the claim. This extension is provided under the authority of 24 CFR 203.355. Written extension requests do not need to be submitted to HUD.
Question 1 - A mortgagor often contacts a mortgagee in a last minute attempt to save their home from foreclosure. The mortgagee is in receipt of a workout packet, has validated the mortgagor's ability to pay and contacted foreclosure counsel to ask for a 30-day postponement of the sale date. This affords the mortgagee time to complete the analysis, determine the best workout option, obtain a commitment from the mortgagor and either approve or deny the workout. The mortgagee also finds that this decreases potential contested cases and removes the threat of a bankruptcy filing. Does the 90-day automatic extension apply in the event the workout is denied or does the mortgagee need to request an Extension to meet their deadline to institute foreclosure?
Answer - Judicial States - If the mortgagor's property is located in a state that allows the mortgagee to place the foreclosure on hold then there is no need for an Extension of Time to meet the first legal because the mortgagee has already met it. If the loss mitigation option fails, the mortgagee would document their claim review file and recommence foreclosure proceedings. (See HUD Handbook 4330.4, page 1-11, Paragraph F.3. - Time Frames for Completion of Foreclosure).
Non-Judicial States - If the mortgagor's property is located in a state that requires the mortgagee to cancel an active non-judicial foreclosure, then the mortgagee will need to submit a Request for Extension of Time to cover the time missed by the canceled foreclosure.
EXAMPLE: 11/01 - Original First Legal Deadline Date
10/28 - Mortgagee initiated foreclosure (First Legal met)
12/05 - Mortgagee receives Loss Mitigation Package and determines Mortgagor qualifies for a Special Forbearance Agreement
12/05 - Mortgagee submits Extension of Time Request to NSC for approval
12/06 - Mortgagee receives approval of Extension of Time Request from NSC and therefore "cancels" the foreclosure action.
NEW FIRST LEGAL DEADLINE DATE will be calculated from the "Original" First Legal Deadline Date
Question 2 - A mortgage loan has the default date of 10/01/08; therefore, the six-month deadline to initiate foreclosure is 04/01/09. The mortgagee reviewed the loan on 02/07/09 and approved the mortgagor for a Special Forbearance option on 03/09/09. The mortgagor made the first payment on 03/14/09, but failed to return the executed Special Forbearance Agreement. Is the mortgagee eligible for an automatic 90-day extension of time?
Answer - Mortgagee Letter 2002-17, page 8, "Automatic Extension" states in part: If a mortgagee has initiated but is unable to complete a Special Forbearance option within the initial six-month time limit and reported the action in the Single Family Default Monitoring System using the appropriate status code (09, 12 or 32), the mortgagee is entitled to an automatic 90-day extension of the foreclosure deadline. However, to complete the Special Forbearance option, the mortgagee must still obtain the executed Special Forbearance agreement from the Mortgagor within the automatic 90 day extension of foreclosure time to meet the time requirement as stated in Mortgagee Letter 00-05, Section K, page 12, "Time Requirement to Initiate Action."
Question 3 - During the automatic 90-day extension of time that was utilized in Question 2 above, the mortgagor's circumstances have changed and the Special Forbearance cannot be completed. The mortgagor qualifies for a different Loss Mitigation Option but this cannot be completed within the automatic 90-day extension of time. Is there another automatic 90-day extension of time since the Loss Mitigation Option has now changed?
Answer - If during this automatic 90-day extension of time the mortgagee cannot complete the Special Forbearance and must now utilize a different Loss Mitigation Option but is unable to complete within this timeframe, the mortgagee must submit a Request for Extension of Time form HUD-50012 to NSC-Oklahoma City to extend the foreclosure deadline before the expiration of the automatic 90-day extension of time.
Question 4 - Help me understand Authorized Automatic Extensions
Bankruptcy Extensions - Per Mortgagee Letter 1998-07, a 90-day extension of time is allowed for the prohibition of foreclosure due to Bankruptcy or for prohibition to foreclosure due to state law. The Mortgagee is granted an automatic 90-day extension from the relief date of Bankruptcy to commence or recommence Foreclosure action or consider Loss Mitigation Options. The 90-day extension includes the time to issue new demand/breach notices if needed. This automatic 90-day extension can not be combined with the automatic extension of time for initiating Loss Mitigation.
Disaster Extensions - All the National Disaster Areas identified by FEMA (www.fema.gov) will be subject to a 90-day Moratorium on foreclosures following the disaster. See HUD HB 4330.1 REV-5, Chapter 14. In addition, per Mortgagee Letter 2006-18, Mortgagees are granted an automatic 90-day extension from the date of the moratorium expiration date to commence or recommence foreclosure action or consider Loss Mitigation Options.
Servicemembers Civil Relief Act (SCRA) - Effective July 30, 2008, a change to 50 USCS Appx § 533 affecting the SCRA sections (b) and (c) took effect. A sale, foreclosure, or seizure of property for a breach of an obligation described in subsection (a) shall not be valid if made during, or within 9 months after, the period of the servicemember's military service except - (1) upon a court order granted before such sale, foreclosure, or seizure with a return made and approved by the court; or (2) if made pursuant to an agreement as provided in section 107 [50 USCS Appx § 517]. The amendment will remain in effect until 12/31/2010.
Section 533 will revert back to the prior version on 1/1/2011. A 90-day extension is allowed for Mortgagors protected under the Servicemembers Civil Relief Act (SCRA). More information can be found for the SCRA from Mortgagee Letter 2006-28.
Question 5 - Help me understand how to Calculate the First Legal Deadline Date (FLDD)
Special Provisions for Type 1 Special Forbearance (Default caused by Unemployment) - All payments have been received in accordance with the Agreement; yet Mortgagor has not been able to acquire employment. Sixty (60) consecutive days of failure begins from the day of the first missed payment under the Agreement, and then the Mortgagee is entitled to the Automatic 90-day extension. EXAMPLE: Special Provision for Type 1 SFB states 4 payments due as follows:
1/20/08 - payment made
2/20/08 - payment made
3/20/08 - payment made
4/20/08 - first missed payment - 60 consecutive days of failure begins
6/19/08 - Begin 90-day Automatic extension
9/17/08 - FLDD
Special Forbearance Type 2 - All payments have been received in accordance with the Agreement. Executed Documents have NOT been returned to lender. 60 Consecutive Days of failure is to begin from the deadline date the executed documents were due back to the Mortgagee under the Agreement, then Mortgagee is entitled to the Automatic 90-day extension. EXAMPLE: SFB Type 2 states 4 payments due as follows:
03/15/08 - payment made
04/15/08 - payment made
05/15/08 - payment made
06/15/08 - 60 consecutive days of failure begins
08/15/08 - 90 days of Automatic 90-day extension begins
11/15/08 - FLDD
Vacant/Abandoned, Defaulted Mortgage - Per Mortgagee Letter 1998-07 - 24 CFR 203.355, Acquisition of Property - The final rule now requires that the mortgagee must initiate foreclosure or take one of the other actions specified in the rule (24 CFR 203.355 (a)) within six months from the date of default. This change shall apply to all mortgages where the date of default is on or after February 1, 1998. (B) Vacant or abandoned property - The Loss Mitigation Final Rule did not change any of the requirements for properties that have become vacant or abandoned 203.355 (b). 2. If the mortgage is in default and the property has been determined to be vacant or abandoned, foreclosure must be initiated by the earliest of: (a) six months from the date of default, OR (b) 120 days after the date the property become vacant, was discovered vacant or should have been discovered vacant.
Vacant Current Mortgage - EXAMPLE - Mortgagee completed a property inspection on a CURRENT mortgage. This inspection, under HUD's guidelines, would be considered as the "Initial Property Inspection." Property was found to be VACANT. The following is provided:
06/25/08 Property Inspection Conducted, mortgage current, property is vacant
07/25/08 July/08 payment made
08/23/08 Aug/08 payment made
09/19/08 Sep/08 payment made
10/24/08 Oct/08 payment made
11/01/08 Nov/08 payment due and unpaid - mortgage delinquent
12/01/08 2 payments due and unpaid - mortgage in default
12/16/08 Property Inspection Conducted - Property vacant
NSC Management has stated that the 6/25/08 property inspection is NOT to be considered in determining FLDD. The 12/16/08 property inspection is to be utilized in determining 120 days from "known" vacancy as FLDD for Mortgagee to initiate foreclosure.
Question 6 - Help me Determine the Due Date To Submit Partial Claim Documents For Recordation
"Upon execution of a partial claim by a mortgagor, the Department requires that the partial claim security instruments be submitted for recordation to the appropriate jurisdiction within a maximum period of five (5) business days following the execution AND prior to filing a claim with HUD." [Mortgagee Letter 2003-19, page 6, Paragraph O. Recordation Requirements]
Headquarters has concurred stating that since the Mortgagee does not have control over when the Mortgagor executes and returns the document to the Mortgagee, the "5 business days" begins from the date the Mortgagee receives the executed documents back from Mortgagor.
Extension of Time Requests on Partial Claim documents being provided to HUD Contractor within 6 months, the Mortgagee must provide the following information:
- Date Partial Claim was executed by Mortgagor
- Date executed Partial Claim documents were received from Mortgagor at Mortgagee
- Date Mortgagee sent Partial Claim documents to recording office - This date is to be 5 business days from the date the Partial Claim documents were received from Mortgagor at Mortgagee.
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