To comply with required time frames, an Extension of Time is a tool afforded to Lenders to assist in the initiation or completion of HUD's Loss Mitigation Program (except Preforeclosure Sales Program) and/or foreclosure action. A Lender is required to submit to the National Servicing Center, Form HUD-50012, Mortgagee's Request for Extensions of Time, prior to the expiration of the respective time frame via the EVARS.
Question 1 - The lender timely initiates foreclosure and later receives the borrower’s request for mortgage assistance. The lender has validated the borrower's ability to pay, and has contacted foreclosure counsel to ask for a 30-day postponement of the sale date. If the lender ultimately decides to proceed with foreclosure, does the 90-day automatic extension apply or does the Lender need to request an extension to meet the deadline to initiate foreclosure?
Judicial States – If the lender has placed the foreclosure on hold (as permissible in some states), then there is no need for an extension to meet the first legal deadline, as the lender has already met it. Otherwise, if a loss mitigation option fails and the lender decides to proceed with foreclosure, the lender would document their claim review file and recommence foreclosure proceedings. (See HUD Handbook 4330.4, page 1-11, Paragraph F.3).
Non-Judicial States - If the borrower's property is located in a state that requires the lender to cancel an active non-judicial foreclosure, then the Lender will need to submit a Request for Extension of Time to cover the time missed by the canceled foreclosure.
EXAMPLE: 11/01 - Original first legal deadline date
10/28 - Lender initiated foreclosure (first legal met)
12/05 - Lender receives borrower's request for mortgage assistance and determines that borrower qualifies for a Special Forbearance agreement
12/05 - Lender submits Extension of Time Request to NSC for approval
12/06 - Lender receives approval of Extension of Time Request from NSC and therefore "cancels" the foreclosure action.
NEW FIRST LEGAL DEADLINE DATE will be calculated from the "Original" First Legal Deadline Date
See Handbook 4330.4 and ML 2002-17
Question 2 - A mortgage loan has the default date of 10/01/08; therefore, the six-month deadline to initiate foreclosure is 04/01/09. The Lender reviewed the loan on 02/07/09 and approved the Borrower for a Special Forbearance option on 03/09/09. The Borrower made the first payment on 03/14/09, but failed to return the executed Special Forbearance Agreement. Is the Lender eligible for an automatic 90-day extension of the deadline to initiate foreclosure?
Answer - Yes, a lender is entitled to an automatic 90-day extension of the deadline to initiate foreclosure if the lender has initiated, but is unable to complete, a Special Forbearance option within the initial six-month time limit and the lender has reported the action in SFDMS. However, to timely complete the Special Forbearance option, the lender must still obtain the executed Special Forbearance agreement from the Borrower within the 90-day extension timeframe. See ML 2002-17 and ML 2000-05.
Question 3 - During the 90-day extension of time to initiate foreclosure, a borrower's circumstances have changed and the Special Forbearance cannot be completed. The Borrower qualifies for a different loss mitigation option, but this cannot be completed within the automatic 90-day extension of time. How may the lender request additional extensions of time?
Answer - If during this automatic 90-day extension of time the Lender cannot complete the loss mitigation option, the lender must submit a Request for Extension of Time, Form HUD-50012, to NSC-Oklahoma City to extend the foreclosure deadline before the expiration of the automatic 90-day extension of time. See ML 2000-05.
Question 4 - What automatic extensions of the deadline to initiate foreclosure are available?
Bankruptcy Extensions - When a delinquent borrower files for bankruptcy, the lender is granted certain 90-day extensions to commence or recommence the foreclosure action or to review the borrower for Loss Mitigation options.
- Chapter 7 bankruptcy: a delay in meeting the reasonable diligence requirement for completing foreclosure must not exceed 90 days from the date of the bankruptcy filing.
- Chapter 11, 12, or 13 bankruptcy: a delay in meeting the reasonable diligence requirement must not exceed 90 days from the date that the payments under the bankruptcy plan became 60 days delinquent.
The 90-day extension includes the time to issue new demand/breach notices if needed. See ML 2005-30.
Disaster Extensions - Borrowers in properties located in Presidentially-Declared Major Disaster Areas, as designated on the Federal Emergency Management Agency (FEMA) website at http://www.fema.gov/disasters, will be subject to a 90-day moratorium on foreclosures following the date of the disaster declaration. In addition, lenders are granted an automatic 90-day extension from the date of the moratorium expiration date to commence or recommence foreclosure action or to review borrowers for Loss Mitigation options. See Handbook 4330.1, Chapter 14, and ML 2006-18.
Servicemembers Civil Relief Act (SCRA) - Certain protections are available for servicemembers whose mortgages were initiated before the servicemembers’ active duty military service and for which the servicemembers are still obligated. Sales, foreclosures and seizures of properties secured by these mortgages are not valid if made during or within one year after the period of the servicemember’s military service, except:
- Upon court order granted before the sale, foreclosure or seizure with a return was made and approved by the court; or
- If made pursuant to an agreement as provided in 50 U.S.C. Appx 517 (Waiver of rights pursuant to written agreement).
These provisions of the SCRA are in effect until December 31, 2015. Under provisions of 24 CFR 203.346, the servicemember’s active duty military service period is excluded in computing the period during which the mortgagee must initiate foreclosure or acquire the property by other means. See ML 2006-28.