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Modernization of Engagement With Mortgagors in Default: Partial Extension of Compliance Date

This document extends the compliance date for certain provisions of HUD's final rule entitled "Modernization of Engagement with Mortgagors in Default" that require mortgagees to...

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Department of Housing and Urban Development

24 CFR Part 203
[Docket No. FR-6353-N-03]
RIN 2502-AJ66

AGENCY:

Office of the Assistant Secretary for Housing—Federal Housing Commissioner, U.S. Department of Housing and Urban Development (HUD).

ACTION:

Final rule; partial extension of compliance date.

SUMMARY:

This document extends the compliance date for certain provisions of HUD's final rule entitled “Modernization of Engagement with Mortgagors in Default” that require mortgagees to conduct meetings with all mortgagors in default. This requirement includes borrowers who do not reside in the mortgaged property and with mortgagees where the relevant property is not within 200 miles of the mortgagee, its servicer, or a branch office, which were excepted under HUD's existing regulation for conducting meetings with mortgagors in default. The compliance date for these provisions is extended until July 1, 2025. HUD is taking this action to permit mortgagees sufficient time to update their mortgage servicing processes and procedures to comply with the policy that will be established in a forthcoming mortgagee letter entitled “Modernization of Engagement with Borrowers in Default.”

DATES:

The compliance date for the final rule amending 24 CFR 203.604, published August 2, 2024, at 89 FR 63082 as it applies to certain mortgagors and properties is extended until July 1, 2025. See SUPPLEMENTARY INFORMATION for more information.

FOR FURTHER INFORMATION CONTACT:

Elissa Saunders, Director, Office of Single Family Asset Management, Office of Housing, Department of Housing and Urban Development, 100 South Charles Street, Bank of America Building, Tower II, 11th Floor, Baltimore, MD 21201; telephone number 202-402-2378 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background

On August 2, 2024, HUD published a final rule entitled “Modernization of Engagement with Mortgagors in Default” (FR-6353-F-02), available at 89 FR 63082. The final rule revises requirements in 24 CFR 203.604 for mortgages insured pursuant to part 203, except for mortgages insured on Indian Land pursuant to section 248 of the National Housing Act. The effective date of the final rule is January 1, 2025.

II. Partial Extension of Final Rule Compliance Date

Mortgagees are not required to comply until July 1, 2025, with the provisions of the Modernization of Engagement for Mortgagors in Default final rule that require mortgagees to conduct meetings with mortgagors who do not reside in the mortgaged property and where the relevant properties are not within 200 miles of the mortgagee, its servicer, or a branch office, which mirror the two exceptions currently codified in 24 CFR 203.604(c).

As revised by the Modernization of Engagement with Mortgagors in Default final rule, 24 CFR 203.604(a)(3) will require that “[a] reasonable effort to arrange a meeting with the mortgagor shall consist of, at a minimum, two ( printed page 92034) verifiable attempts to contact the mortgagor utilizing methods determined by the Secretary.”

Mortgagees have repeatedly stated that they require sufficient time to update their processes and procedures, including making updates to their information technology, staff training, internal standard operating procedures, revisions to contracts, and mortgagor-facing documents and communication. Mortgagees have also stated the need for adequate time to update their internal quality controls, hire additional staff, align their procedures for HUD's new requirements with requirements from other Federal agencies, establish new contracts for specific outreach methods, and update internal documentation requirements, among other things.

Given that HUD has not yet provided guidance on complying with the revised requirements to 24 CFR 203.604(a)(3) to enable Mortgagees to begin adjusting their processes and procedures, HUD is partially extending the compliance period for the Modernization of Engagement with Mortgagors in Default final rule until July 1, 2025, to permit mortgagees to continue to rely upon two exceptions to the meeting requirements that exist in § 203.604(c) as it is currently codified.

The two additional exceptions that mortgagees may continue to rely upon are that a meeting with the mortgagor is not required if:

(1) The mortgagor does not reside in the mortgaged property; and

(2) The mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either.

HUD believes that this partial extension of the compliance period will allow mortgagees sufficient time to implement the guidance in the forthcoming Modernization of Engagement with Borrowers in Default Mortgagee Letter ^[1] and to ensure mortgagee compliance with the revised requirements in 24 CFR 203.604. Mortgagees may optionally elect to comply with the entirety of the Modernization of Engagement with Mortgagors in Default final rule beginning on January 1, 2025, the effective date of the rule.

Julia R. Gordon,

Assistant Secretary for Housing, Federal Housing Commissioner.

Footnotes

1. When the Modernization of Engagement with Borrowers in Default Mortgagee Letter is published, it will be accessible at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee until incorporated into the Single Family Housing Policy Handbook 4000.1.

Back to Citation

[FR Doc. 2024-27077 Filed 11-20-24; 8:45 am]

BILLING CODE 4210-67-P

Legal Citation

Federal Register Citation

Use this for formal legal and research references to the published document.

89 FR 92033

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Suggested Web Citation

Use this when citing the archival web version of the document.

“Modernization of Engagement With Mortgagors in Default: Partial Extension of Compliance Date,” thefederalregister.org (November 21, 2024), https://thefederalregister.org/documents/2024-27077/modernization-of-engagement-with-mortgagors-in-default-partial-extension-of-compliance-date.