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HUD’s “Face to Face” Requirements: Cook County, IL Court Rules

Posted By USFN, Thursday, August 1, 2013
Updated: Monday, November 30, 2015

August 1, 2013

 

by Lee Perres & Nick Schad
Pierce & Associates, P.C. – USFN Member (Illinois)

Pursuant to a court order issued on June 14, 2013, a trial court within Cook County, Illinois has held that a mortgagee must comply with HUD regulations relating to a face-to-face interview with a mortgagor, “or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid” if the mortgagee or its servicer has any branch office located within 200 miles of the property being foreclosed.

Counsel argued that the HUD face-to-face requirement only applied if a “servicing branch office” was located within 200 miles of the property. While this has been the accepted practice and the HUD interpretation, the court disagreed, specifically stating that the term branch office “is not ambiguous” and applies “to all branch offices of the mortgagee or its servicer, not just those offices regularly performing servicing functions.” The trial court referenced that HUD may have only intended to enforce the requirements within 200 miles of a “servicing branch;” however, without an amendment of the language within HUD’s provisions, the court will not grant HUD’s interpretation of “branch office” any deference.

While this is only the decision of one trial judge in Cook County, other judges have indicated that they will follow this ruling. The statute in question is § 203.604 Contact with the mortgagor and the relevant text has been bolded and underlined below:

(a) [Reserved]
(b) The mortgagee must have a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid. If default occurs in a repayment plan arranged other than during a personal interview, the mortgagee must have a face-to-face meeting with the mortgagor, or make a reasonable attempt to arrange such a meeting within 30 days after such default and at least 30 days before foreclosure is commenced, or at least 30 days before assignment is requested if the mortgage is insured on Hawaiian home land pursuant to section 247 or Indian land pursuant to section 248 or if assignment is requested under § 203.350(d) for mortgages authorized by section 203(q) of the National Housing Act.
(c) A face-to-face meeting is not required if: (1) The mortgagor does not reside in the mortgaged property, (2) The mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either, (3) The mortgagor has clearly indicated that he will not cooperate in the interview, (4) A repayment plan consistent with the mortgagor’s circumstances is entered into to bring the mortgagor’s account current thus making a meeting unnecessary, and payments thereunder are current, or (5) A reasonable effort to arrange a meeting is unsuccessful.
(d) A reasonable effort to arrange a face-to-face meeting with the mortgagor shall consist at a minimum of one letter sent to the mortgagor certified by the Postal Service as having been dispatched. Such a reasonable effort to arrange a face-to-face meeting shall also include at least one trip to see the mortgagor at the mortgaged property, unless the mortgaged property is more than 200 miles from the mortgagee, its servicer, or a branch office of either, or it is known that the mortgagor is not residing in the mortgaged property.

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