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FDIC ISSUES GUIDANCE ON DISCONTINUATION OF FORECLOSURE PROCEEDINGS

The FDIC has issued a document clarifying renewed expectations for lenders who abandon foreclosure efforts.  The document is available here at the FDIC's site.
 
The FDIC has issued a document clarifying renewed expectations for lenders who abandon foreclosure efforts.  The document is available here at the FDIC's site.  Lenders who commence foreclosure actions, but elect to not proceed for economic or other reasons not related to an agreement with the borrower, are expected to have policies and procedures in place.  Lenders should be prepared to provide those policies to their examiners.

From the document, with emphasis added:

The FDIC's supervisory activities will include a review of institutions' policies and practices related to foreclosure proceedings, including determinations to discontinue such actions. During safety and soundness examinations, examiners will review institutions' analyses for supporting decisions to initiate, pursue, or discontinue foreclosure actions; decisions to release liens; and management reports on these activities. During consumer protection examinations, examiners will review the actions taken by institutions to contact the borrower(s) and whether notices to the borrower(s) and local authorities regarding their decision to discontinue a foreclosure proceeding include the information described above and were provided in a manner that complies with applicable state or local government authorities' notification requirements. Consumer protection examiners also will review whether institutions' consumer inquiry and complaint process adequately address concerns raised regarding abandoned foreclosures.

Lenders may wish to discuss the implications of this guidance with their trusted counsel to see how it may relate to a particular lender's portfolio.  Those companies with a current relationship with Bass & Moglowsky, S.C. can direct questions to Attorney Shawn Hillmann at shawn@basmog.com

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