19.2 Early Intervention, Continuity of Contact and Loss Mitigation

Mandatory Cancellation and Full Premium Refund (12 CFR § 1024.37(g))

Within 15 calendar days of receiving proof that the borrower has maintained continuous hazard insurance coverage, the servicer must:

• Cancel the force-placed insurance policy; and
• Refund all force-placed insurance premiums and related fees assessed for any period of overlapping coverage.

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Early Intervention & Continuity of Contact (12 CFR § 1024.39, § 1024.40)

Regulation X mandates structured, early operational engagement with delinquent mortgage borrowers:

• Good Faith Live Contact (§ 1024.39(a)): Servicers must make good faith efforts to establish oral live contact no later than the 36th calendar day of delinquency, informing the borrower about available loss mitigation options.
• Written Delinquency Notice (§ 1024.39(b)): Delivered no later than the 45th calendar day of delinquency. The notice must detail the delinquency status, provide servicer contact information, describe available loss mitigation programs, and supply CFPB/HUD housing counseling directory info.
• Continuity of Contact (§ 1024.40): Servicers must assign appropriate accessible servicing personnel to the delinquent borrower by the 45th calendar day of delinquency, ensuring consistent, informed assistance.

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Loss Mitigation Procedures & Anti-Dual-Tracking Prohibitions (12 CFR § 1024.41)

Regulation X Section 1024.41 establishes binding procedural rights for borrowers seeking mortgage loss mitigation options (e.g., loan modifications, forbearance, repayment plans, short sales, deeds-in-lieu).

Application Intake and Evaluation Deadlines

• 5-Business-Day Intake Notice: For an application received at least 45 days before a sale, within 5 business days of receiving a loss mitigation application, the servicer must deliver a written notice acknowledging receipt and stating whether the application is complete or incomplete (and listing missing documentation).
• 30-Calendar-Day Evaluation Window: If a complete loss mitigation application is received more than 37 calendar days before a scheduled foreclosure sale, the servicer must evaluate the borrower for all available loss mitigation options within 30 calendar days, providing written notice of specific terms or reasons for denial.

Borrower Acceptance Windows and Appeal Rights

• Acceptance Windows: Borrowers must be given at least 14 calendar days to accept or reject an offer (if application was received at least 90 calendar days before sale) or at least 7 calendar days (if received 38–89 days before sale).
• Independent Appeal Rights: If a complete application received at least 90 calendar days before sale is denied for any loan modification option, the borrower has 14 calendar days to appeal. The appeal must be evaluated by supervisory personnel not involved in the original decision within 30 calendar days.

Dual Tracking Prohibitions

The rule prohibits specified foreclosure actions when its delinquency, application, timing and other conditions are met; it is not a blanket prohibition on all simultaneous servicing and foreclosure activity:

1. The 120-Day Pre-Foreclosure Rule (§ 1024.41(f)(1)): A servicer cannot make the first notice or filing for judicial or non-judicial foreclosure unless the borrower's mortgage loan obligation is more than 120 days delinquent.
2. Post-Filing Foreclosure Ban (§ 1024.41(g)): If a borrower submits a complete loss mitigation application after the first filing but more than 37 calendar days before a scheduled foreclosure sale, the servicer cannot move for foreclosure judgment or order of sale, or execute a sale, while the application is under review.

Small Servicer Exemption (12 CFR § 1024.41(j))

Servicers that service 5,000 or fewer mortgage loans, all of which they or an affiliate own or originated, are classified as small servicers. Small servicers are exempt from most of §§ 1024.39, 1024.40, and 1024.41, but remain strictly bound by the 120-day pre-foreclosure rule and the ban on moving for foreclosure while a loss mitigation agreement is in place.

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Timeline Summary of Servicing and Loss Mitigation Requirements

Exceptions and clocks in servicing scenarios

For these servicing response clocks, business days exclude Saturdays, Sundays and legal public holidays. An RFI requesting the identity and contact information of the loan owner or assignee generally has a ten-business-day response period; a payoff-error NOE has seven. A payoff statement itself also has a separate Regulation Z rule. The rule has specific acknowledgment and response exceptions, including correction within five business days, duplicative or untimely requests and an overbroad RFI. Do not apply the ordinary 30-day period to every request.

Loss mitigation evaluation protections normally require a complete application received more than 37 days before sale. The intake acknowledgment requires receipt at least 45 days before sale. Continuity of contact requires access to assigned personnel who can help the borrower; it does not require one exclusive individual or a department with a particular title. Early intervention has specific bankruptcy and cease-communication exceptions. Foreclosure’s 120-day rule has narrow exceptions for a due-on-sale violation and joining another lienholder’s foreclosure, rather than a general vacant-property exemption. Small-servicer coverage and exemptions must be checked before imposing every large-servicer procedure.

Regulation X loss mitigation procedures.