Home Ownership Counseling and SCRA Notices

Issue/Inquiry

The Bank is currently providing the Notice regarding Homeownership Counseling and the SCRA Notice each month with its home equity line statements, and the SCRA notice each month on consumer 1-4 family 1st DOT, Consumer 1-4 family 2nd DOT, and Non-Owner Occupied 1-4 family. The Bank asks for guidance in order to improve efficiency in this area, including information regarding disclosure type, timing and frequency.

Response Summary

The Homeownership Counseling Notice and SCRA Notice must be sent within 45 days of the homeowner borrower becoming delinquent, unless the loan is brought current within that period. If the notice is provided and the loan is brought current but then becomes delinquent again, the notice must be provided again.

Response Detail

Introduction

The Homeownership Counseling Notice and the SCRA Notice complement each other, as the SCRA Notice is to be provided regardless of whether a similar notice is provided under any other legal or regulatory requirement. Both are to be provided within 45 days of the borrower missing a payment, unless the borrower pays the past due amount.

Home Ownership Counseling Notice

The Housing and Urban Development Act requires the Homeownership Counseling Notice to be provided by all creditors servicing loans secured by a mortgage or lien on a single-family residence.  The notice must include the following:

• Notification of the availability of any homeownership counseling offered by the creditor
• Provide either a list of HUD-approved nonprofit homeownership organizations or the toll-free number HUD has established through which a list of such organizations can be obtained

The notice must be given to a delinquent home-owner borrower no later than 45 days after the date on which the homeowner becomes delinquent, unless the homeowner has brought the loan current again within that period.

This means that if the notice is sent and the loan is brought current but becomes delinquent again, the notice must be sent again.

SCRA Notice

The SCRA Notice informs borrowers of the mortgage and foreclosure-related benefits available to servicemembers and their dependents under the Servicemembers Civil Relief Act (“SCRA”).

The notice is to be sent to all homeowners when they are in default, whether they are in the service or not, as it is impossible for a creditor to know whether a particular borrower is protected under the SCRA. It must be sent within 45 days of the homeowner becoming delinquent, unless the loan is brought current again within that period.

As with the Homeownership Counseling Notice, this means that if the notice is sent and the loan is brought current but becomes delinquent again, the notice must be sent again.

The notice contains five sections:

• Legal rights and protections under SCRA
• Who may be entitled to legal protections under SCRA
• What legal protections are servicemembers entitled to under SCRA
• How a servicemember or dependent requests relief under SCRA
• How a servicemember or dependent obtains information about SCRA

The SCRA Notice is provided in addition to any other homeownership counseling notice. The requirement to provide the notice applies to all residential loans, including conventional mortgages and HUD-insured mortgages.

This entry was posted on Monday, December 21st, 2015 at 2:00 pm.