(a) Duty to mitigate. Before four full monthly installments due on the mortgage have become unpaid, the mortgagee shall evaluate on a monthly basis all of the loss mitigation techniques provided at § 203.501 to determine which is appropriate. Based upon such evaluations, the mortgagee shall take the appropriate loss mitigation action. Documentation must be maintained for the initial and all subsequent evaluations and resulting loss mitigation actions. Should a claim for mortgage insurance benefits later be filed, the mortgagee shall maintain this documentation in the claim review file under the requirements of § 203.365(c).
(b) Assessment of mortgagee's loss mitigation performance. (1) HUD will measure and advise mortgagees of their loss mitigation performance through the Tier Ranking System (TRS). Under the TRS, HUD will analyze each mortgagee's loss mitigation efforts portfolio-wide on a quarterly basis, based on 12 months of performance, by computing ratios involving loss mitigation attempts, defaults, and claims. Based on the ratios, HUD will group mortgagees in four tiers (Tiers 1, 2, 3, and 4), with Tier 1 representing the highest or best ranking mortgagees and Tier 4 representing the lowest or least satisfactory ranking mortgagees. The precise methodology for calculating the TRS ratios and for determining the tier stratification (or cutoff points) will be provided through Federal Register notice. Notice of future TRS methodology or stratification changes will be published in the Federal Register and will provide a 30-day public comment period.
(2) Before HUD issues each quarterly TRS notice, HUD will review the number of claims paid to the mortgagee. If HUD determines that the lender's low TRS score is the result of a small number of defaults or a small number of foreclosure claims, or both, as defined by notice, HUD may determine not to designate the mortgagee as Tier 3 or Tier 4, and the mortgagee will remain unranked.
(3) Within 30 calendar days after the date of the TRS notice, a mortgagee that scored in Tier 4 may appeal its ranking to the Deputy Assistant Secretary for Single Family or the Deputy Assistant Secretary's designee and request an informal HUD conference. The only basis for appeal by the Tier 4 mortgagee is disagreement with the data used by HUD to calculate the mortgagee's ranking. If HUD determines that the mortgagee's Tier 4 ranking was based on incorrect or incomplete data, the mortgagee's performance will be recalculated and the mortgagee will receive a corrected tier ranking score.
(c) Assessment of civil money penalty. A mortgagee that is found to have failed to engage in loss mitigation as required under paragraph (a) of this section shall be liable for a civil money penalty as provided in § 30.35(c) of this title.
[70 FR 21578, Apr. 26, 2005]
Notes of Decisions
Cited in
19
cases (
3 in the last 5 years), 2005–2023 · leading case:
PNC Mtge. v. Garland, 2014 Ohio 1173 (Ohio Ct. App. 2014).
PNC Mtge. v. Garland, 2014 Ohio 1173 (Ohio Ct. App. 2014).
· cites it 3× “604 (contact with mortgagor) and 24 C.F.R. 203.605 (loss mitigation). Garland claims the affidavit she filed in support of her brief in opposition to summary judgment creates genuine issues of material fact on these issues.”
Motten v. Chase Home Fin., 831 F. Supp. 2d 988 (S.D. Tex. 2011).
· cites it 2× “Plaintiffs seem to assert that Defendant violated Housing & Urban Development (“HUD”) regulations, 24 C.F.R. §§ 203.605 and 24 C.F.R. 203.606 by their conclusory statement, devoid of facts or identification of the allegedly wrongful conduct: “Defendant has wholly failed to…”
Bates v. Cohn, 9 A.3d 846 (Md. 2010).
· cites it 2× “measure[s] and advise[s] [lenders] of their loss mitigation performance,” 24 C.F.R. § 203.605 (b)(1), with unsatisfactory marks possibly "result[ing] in the loss of incentive compensation and other benefits,” Mortgage Letter 00-05.”
James B. Nutter & Co. v. Namahoe, Sr., 528 P.3d 222 (Haw. 2023).
“604 (2009), conduct loss mitigation efforts to cure defaults, 24 C.F.R. §§ 203.605 (2009) and 203.501 (2009), conduct pre-foreclosure review, 24 C.”
Lacy-McKinney v. Taylor, Bean & Whitaker Mortg. Corp., 937 N.E.2d 853 (Ind. Ct. App. 2010).
“24 C.F.R. § 203.605 (a). Finally, Subpart C requires a mortgagee to accept any partial payment from the mortgagor 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.”
Castrillo v. Am. Home Mortg. Servicing, Inc., 670 F. Supp. 2d 516 (E.D. La. 2009).
“It also requires certain creditors to take loss mitigation measures upon default or imminent default on certain mortgage loans for the purpose of providing an alternative to foreclosure.”
US Bank Nat'l Ass'n v. McMullin, 55 Misc. 3d 1053 (N.Y. Sup. Ct. 2017).
“602 [requires notice of default to be sent to borrower "no later than the end of the second month of any delinquency in payments under the mortgage”]; 24 CFR 203.605 [a] [requires borrower to be evaluated for loss-mitigation “(b)efore four full monthly installments due on the…”
Buis v. Wells Fargo Bank, N.A., 401 F. Supp. 2d 612 (N.D. Tex. 2005).
“Defendant WFB was also required to conduct a Loss Mitigation Evaluation pursuant to 24 CFR 203.605 and 203.501. Attached hereto as Exhibits C and D and incorporated by reference are true and correct copies of same.”
Martinez v. BAC Home Loans Servicing, LP, 777 F. Supp. 2d 1039 (W.D. Tex. 2010).
“• For all loans in default for three months, document that the lender has considered all loss mitigation options to determine which, if any, are appropriate before initiating foreclosure; 24 C.F.R. § 203.605 . Plaintiff maintains the only loss mitigation effort undertaken by TBW…”
Nationstar Mtge., L.L.C. v. Covert, 2015 Ohio 3757 (Ohio Ct. App. 2015).
· cites it 2× “{¶32} Appellants argue that Nationstar failed to comply with the loss mitigation process as required by the HUD regulations as set forth in 24 C.F.R. §203.605 , prior to acceleration of the debt.”
— 24 C.F.R. § 203.605(a) — 3 cases
PNC Mtge. v. Garland, 2014 Ohio 1173 (Ohio Ct. App. 2014).
“604 (contact with mortgagor) and 24 C.F.R. 203.605 (loss mitigation). Garland claims the affidavit she filed in support of her brief in opposition to summary judgment creates genuine issues of material fact on these issues.”
Nationstar Mtge., L.L.C. v. Covert, 2015 Ohio 3757 (Ohio Ct. App. 2015).
“{¶32} Appellants argue that Nationstar failed to comply with the loss mitigation process as required by the HUD regulations as set forth in 24 C.F.R. §203.605 , prior to acceleration of the debt.”
— 24 C.F.R. § 203.605(c) — 1 case
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