C.F.R. » Title 24 » CHAPTER II—OFFICE OF ASSISTANT SECRETARY FOR HOUSING—FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT › SUBCHAPTER B—MORTGAGE AND LOAN INSURANCE PROGRAMS UNDER NATIONAL HOUSING ACT AND OTHER AUTHORITIES › PART 203—SINGLE FAMILY MORTGAGE INSURANCE › Subpart C—Servicing Responsibilities

24 C.F.R. § 203.556

Return of partial payments

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(a) For the purpose of this section, a partial payment is a payment of any amount less than the full amount due under the terms of the mortgage at the time the payment is tendered, including late charges.

(b) Except as provided in this section, the mortgagee shall accept any partial payment and either apply it to the mortgagor's account or identify it with the mortgagor's account and hold it in a trust account pending disposition. When partial payments held for disposition aggregate a full monthly installment they shall be applied to the mortgagor's account, thus advancing the date of the oldest unpaid installment but not the date on which the account first became delinquent.

(c) If the mortgage is not in default, a partial payment may be returned to the mortgagor with a letter of explanation.

(d) If the mortgage is in default, a partial payment may be returned to the mortgagor with a letter of explanation in any of the following circumstances:

(1) When payment aggregates less than 50 percent of the amount then due;

(2) The payment is less than the amount agreed to in a forbearance plan, whether or not reduced to writing;

(3) The property is occupied by a tenant who is paying rent and the rentals are not being applied to the mortgage payments;

(4) Foreclosure has been commenced. (Foreclosure is commenced when the first action required for foreclosure under applicable law is taken.)

(e) Under the following circumstances the mortgagee may return any partial payment received more than 14 days after the mortgagee has mailed to the mortgagor a statement of the full amount due, including late charges, and a notice of intention to return any payment less than such amount.

(1) Four or more monthly installments are due and unpaid, or

(2) A delinquency of any amount has continued for at least six months since the account first became delinquent.

[42 FR 15680, Mar. 23, 1977]
Notes of Decisions
Cited in 13 cases (1 in the last 5 years), 1985–2023 · leading case: Lacy-McKinney v. Taylor, Bean & Whitaker Mortgage Corp.
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Lacy-McKinney v. Taylor, Bean & Whitaker Mortgage Corp. (2010) indctapp · cites it 3× “Taylor-Bean has failed to prove that it complied with 24 C.F.R. § 203.556 regarding the acceptance of partial payments.”
Shawna Bates v. JP Morgan Chase Bank, NA (2014) ca11 “…HUD regulations required acceptance of partial payments. See 24 C.F.R. § 203.556 . 10 . Even when Bates submitted her late payments, she failed to include the associated late fees. </”
Faulkner v. M & T Bank (In re Faulkner) (2018) paeb “556"> 24 C.F.R. § 203.556 (b), (d), (e) ; § 203.”
Allen v. Bank of America, N.A. (2014) txnd “604(e)(2), and 24 C.F.R. 203.556(b), as well as a determination as to whether Plaintiff is entitled to relief as a result of Bank of America’s alleged violations, not whether Bank of America purportedly breached a contract.”
Smith v. Commercial Banking Corp. (In re Smith) (1989) ca3 “24 C.F.R. § 203.556 (d)(4). As discussed, however, supra note 7, Pennsylvania law requires that the mortgage lender provide the mortgage debtor with a minimum of thirty days’ notice prior to the commencement of any foreclosure proceedings.”
Federal National Mortgage Ass'n v. Prior (1985) wisctapp · cites it 5× “See 24 C.F.R. § 203.556 . 1 *185 In reviewing a trial court's grant of summary judgment, this court applies the standards of sec.”
Federal National Mortgage Ass'n v. Moore (1985) ilnd “, 24 C.F.R. § 203.556 . See also Ferrell v.”
Krell v. National Mortgage Corp. (1994) gactapp “See 24 CFR § 203.556 . Nevertheless, we conclude that “the National Housing Act and the regulations promulgated thereunder deal only with the regulations between the mortgagee and the government, and give the mortgagor no claim to duty owed nor remedy for failure to follow.”
FEDERAL NAT. MORTG. ASS'N v. Prior (1985) wisctapp · cites it 5× “See 24 C.F.R. § 203.556 . [1] *185 In reviewing a trial court's grant of summary judgment, this court applies the standards of sec.”
Smith v. Commercial Banking Corp. (In re Smith) (1988) paed “24 C.F.R. 203.556(d)(4). Smith’s payment was offered after the foreclosure complaint was filed, so Fidelity had no obligation to accept it.”
FEDERAL NAT. MORTG. ASS'N v. Moore (1985) ilnd · cites it 2× “, 24 C.F.R. § 203.556 . See also Ferrell v.”
Frank Roberts and Megan Roberts v. Loancare, LLC, American Financial Resources, Inc., HRL Procurement, LLC, and Clay Sib (2023) texapp “…the mortgagor’s account and hold it in a trust account pending disposition.” 24 C.F.R. § 203.556 (b). 3 According to the Roberts, LoanCare and AFR violated this 3 In their brief, the Roberts direct our attention to two federal cases from the Fifth Circuit Court of Appeals…”
Show all 13 citing cases →
— 24 C.F.R. § 203.556(b) — 1 case
Allen v. Bank of America, N.A. (2014) txnd “604(e)(2), and 24 C.F.R. 203.556(b), as well as a determination as to whether Plaintiff is entitled to relief as a result of Bank of America’s alleged violations, not whether Bank of America purportedly breached a contract.”
— 24 C.F.R. § 203.556(d) — 1 case
Lacy-McKinney v. Taylor, Bean & Whitaker Mortgage Corp. (2010) indctapp “Taylor-Bean has failed to prove that it complied with 24 C.F.R. § 203.556 regarding the acceptance of partial payments.”
— 24 C.F.R. § 203.556(d)(4) — 1 case
Smith v. Commercial Banking Corp. (In re Smith) (1988) paed “24 C.F.R. 203.556(d)(4). Smith’s payment was offered after the foreclosure complaint was filed, so Fidelity had no obligation to accept it.”
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