We are considered a small servicer and we are wondering if we have to wait 120 days after a mortgage loan is delinquent before we can send the first notice to file foreclosure. We thought we were exempt but now we’re not so sure.
Small servicers are not exempt from the 120 foreclosure rule you are talking about.
From Regulation X,
1024.41(j): Small servicer requirements. A small servicer shall be subject to the prohibition on foreclosure referral in paragraph (f)(1) of this section. A small servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process and shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of an agreement on a loss mitigation option.
1024.41(f)(1): Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless:
(i) A borrower’s mortgage loan obligation is more than 120 days delinquent;
(ii) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or
(iii) The servicer is joining the foreclosure action of a subordinate lienholder.