(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
Faulkner v. M & T Bank (In re Faulkner), 593 B.R. 263 (Bankr. E.D. Pa. 2018).
“This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary In the Amended Complaint, the Debtor cites the following regulations as having been violated: 24 C.F.R. § 203.556 (b), (d), (e) ; § 203.”
Allen v. Bank of Am., N.A., 5 F. Supp. 3d 819 (N.D. Tex. 2014).
“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. Com. Banking Corp. (In re Smith), 866 F.2d 576 (3rd Cir. 1989).
“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.”
Fed. Nat'l Mortg. Ass'n v. Prior, 381 N.W.2d 558 (Wis. Ct. App. 1985).
· cites it 5× “The trial court granted summary judgment in favor of FNMA and Prior appeals. The issue on appeal is whether the trial court erred in granting summary judgment for FNMA, despite FNMA's violation of a HUD regulation requiring acceptance of a partial payment by a mortgagor.”
Krell v. Nat'l Mortg. Corp., 448 S.E.2d 248 (Ga. Ct. App. 1994).
“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.”
Fed. Nat. Mortg. Ass'n v. Prior, 381 N.W.2d 558 (Wis. Ct. App. 1985).
· cites it 5× “The trial court granted summary judgment in favor of FNMA and Prior appeals. The issue on appeal is whether the trial court erred in granting summary judgment for FNMA, despite FNMA's violation of a HUD regulation requiring acceptance of a partial payment by a mortgagor.”
Smith v. Com. Banking Corp. (In re Smith), 87 B.R. 329 (E.D. Pa. 1988).
“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.”
Fed. Nat. Mortg. Ass'n v. Moore, 609 F. Supp. 194 (N.D. Ill. 1985).
· cites it 2× “Plaintiff does not argue that this letter satisfied either of the notice requirements. [3] As noted below, however, plaintiff's position is that the date of default is October 1982, even though under the regulations, late payments, if accepted, can advance the date of default.”
— 24 C.F.R. § 203.556(b) — 1 case
Allen v. Bank of Am., N.A., 5 F. Supp. 3d 819 (N.D. Tex. 2014).
“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
— 24 C.F.R. § 203.556(d)(4) — 1 case
Smith v. Com. Banking Corp. (In re Smith), 87 B.R. 329 (E.D. Pa. 1988).
“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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