Minimum Standards Standards for for Prioritization Prioritization and Handling Borrower Files Subject to to Imminent Imminent Foreclosure

Sale
Operating standards standards for for scheduled scheduled foreclosure foreclosure sales sales Operating April19, April 19, 2013

The minimum minimum standards standards set set forth forth in in this this guidance guidancereflect reflectsound sound business business practice practice that should should part of of a a mortgage mortgageservicer's servicer'songoing ongoing collections, collections, loss loss mitigation and and foreclosure foreclosure be part processing functions. Accordingly, the OCC requires that all national banks and federal processing functions. Accordingly, the OCC requires that loans savings savings associations associations(collectively, (collectively,"banks") "banks") that that service service residential residential mortgage loans guidance into into their theirongoing ongoing business business processes. processes. Failure to comply with this incorporate the guidance guidance unsafe and and unsound unsound banking practices, practices, non-compliance non-compliance with guidance may result in unsafe and/or require require rescission rescission of of completed foreclosure related foreclosure related consent orders, as applicable, and/or foreclosures.

Purpose

This standards for for the handling handling and This guidance guidance establishes establishesminimum minimum standards prioritization of prioritization of borrower borrower files filesthat that are are subject subject to to imminent (within 60 days) days) scheduled scheduled foreclosure sales. The foreclosure sales. Thepurpose purpose of of this this guidance is guidance is to to ensure ensure that that borrowers will not lose their files receiving receiving pre-foreclosure sale homes without their their files conducted under the standards listed In reviews conducted in this modifications were guidance, which also help ensure loan modifications considered as considered as appropriate. appropriate. servicers of residential mortgages should use use these review Bank servicers whether a a scheduled scheduled and validation standards standards to determine whether foreclosure foreclosure sale should be postponed, suspended or cancelled due to critical critical foreclosure foreclosuredefects defectsin inthe the borrower's borrower'sfile. file. These intended to ensure ensure a level of minimum review criteria criteria are intended consistency across consistency acrossservicers, servicers, not not to to supplant supplant review and validation procedures that Servicers that procedures that go go beyond beyond these these minimums. minimums. Servicers standards as currently apply apply more than these minimum standards as part of their own own pre-foreclosure pre-foreclosure sale review review and validation validation procedures procedures are continue to do so. expected to continue These standards Intended to incorporate the final final rules rules These standards are are not intended amending Regulation X and Regulation Regulation Z issued issued by by the the CFPB CFPB on January 17, 2013, and and effective effective on on January 10, 2014, 2014,which which govern govern January 17, 2013, mortgage servicers' loss mitigation and foreclosure processing mortgage servicers' loss mitigation and foreclosure processing functions. The The OCC OCC expects expects that that all all servicers servicers will undertake functions. appropriate action manner to to ensure ensure their theirpractices practices will action in in a timely manner be compliant with the new rules by the effective date. compliant with the rules by the

Overview

servicers of residential Bank servicers residential mortgages should monitor all borrower foreclosure process files files in in the foreclosure processat at least least weekly weekly to to determine if foreclosure sales are scheduled within the next foreclosure sales are scheduled within the next60 60 days. days. The

perform and servicer should implement procedures to perform and document a timely pre-foreclosure pre-foreclosure sale review according criteria set in according to to the criteria set out in this guidance and appropriately appropriately postpone, postpone, suspend or cancel t.he the scheduled foreclosure sale when when warranted. warranted. will promptly borrower is The servicer will promptly determine determine whether the borrower currently mitigation program program or currently in in an an active active loss mitigation or is being being actively for or has has requested requested consideration consideration under underthe theMaking Making considered for Home Affordable Modification Modification Program (HAMP) or other modification Program (HAMP) or other or loss mitigation mitigation program defined inin standard programas asfurther further defined standardnumber number 9 below,and andwhether whetherfurther further foreclosure foreclosure proceedings proceedings and/or the below, the scheduled scheduled foreclosure foreclosure sale sale should should be be postponed, suspended or cancelled as as required required by program program standards as as applicable. applicable. of criteria criteria for The following non-exhaustive list list of following standards standards are are a a non-exhaustive which would warrant which an an exception would warrant postponement, postponement, suspension or cancellation of a foreclosure foreclosure sale sale until until the theMinimum Minimum PrePre cancellation Foreclosure Foreclosure Sale Sale Review ReviewStandards Standardsare aresatisfied. satisfied. As As noted above, individual servicers individual servicers may apply additional additional standards/criteria standards/criteria to or cancel a foreclosure foreclosure sale. postpone, suspend or Any negative to the the minimum minimum standards standards detailed detailed in this Any negative response to guidance will critical defect (except for for standard standard will be be considered a critical defect (except number 7 number 7 where where a a positive positive response response is is a a defect) defect) and and cause cause to postpone, suspend suspend or or cancel cancel a a scheduled scheduled foreclosure foreclosure sale. Independent control control functions audit, compliance, compliance, and and risk risk functions (such (such as audit, management) should should confirm confirm and and document servicer adherence to their own standards/criteria and the standards standards described described in in own servicing standards/criteria this document document through through a a program program of of monitoring, monitoring, sampling and testing of of scheduled and and completed foreclosure foreclosure sales.

Minimum Pre PreForeclosure Sale Sale Review Standards

scheduled foreclosure foreclosure sale: Date Date of of the the scheduled sale: _ _ _ _ _ __ Once foreclosure is Once the the date of foreclosure is established, established, the servicer servicer needs to confirm following information confirm the the following information before before foreclosing: 1. Is the loan's loan's default default status accurate? accurate? 2. servicer have have and and can can demonstrate demonstrate the the appropriate appropriate
2. Does Does the servicer legal legal authority authority to to foreclose foreclose (documented (documented assignments, assignments, note
endorsements, and other other necessary legal legal documentation, documentation, as
endorsements, and applicable)?
3. Have other required required
Have required required foreclosure foreclosure notices or other borrower or applicable, been
communications communications to the borrower or others, others, as applicable, provided manner?
provided in in a a timely manner? toconfirm confirm whether the 4. Has the the servicer servicer taken taken all all steps steps necessary necessaryto Has borrower, borrower, co-borrower, co-borrower, and and all alloblig_ors obligorson on the the mortgage, trust

deed, or other security security in entitled to in the the nature of a mortgage are entitled protections under the Servicemembers Civil Relief Act (SCRA), protections including running of Defense Defense including running queries queriesthrough through the the Department of database? If the borrower, co-borrower, or other obligor is database? If the borrower, co-borrower, or other obligor is subject to SCRA SCRA protections, protections, has the servicer complied with all applicable legal legal requirements to to foreclose? foreclose? 5. Determine whether whether the the borrower borrower is isin inan anactive activebankruptcy. bankruptcy. If If so, does the servicer have documented documented legal legal authority authority to foreclose? whether the the loan loan is is currently currently under under loss loss mitigation or 6. Determine whether other retention review review or or such such review has been requested requested by the borrower as as part of the foreclosure foreclosure process. process. If If so, did the borrower that that all all conditions conditions necessary to effect servicer notify the borrower the loss loss mitigation is mitigation or or retention retention action action have have not been been met, what is meet those those conditions, conditions, and the date date necessary necessary to cure cure needed to meet borrower the deficiencies deficiencies to to avoid avoid further further foreclosure foreclosureaction? action? If If a borrower submitted a complete loan modification modification application application after after the foreclosure servicer comply comply with any any applicable applicable foreclosure referral, did the servicer dual track track restrictions? restrictions? 7. Is the borrower borrower currently currently in in an an active active trial trial loss loss mitigation mitigation plan? plan? Is the 8. Determine whether whether the servicer servicer accepted any payment from from the borrower in borrower in the the preceding preceding 60 60 days days (that (that is, were borrower payments, including including interest, principal, principal, fees, escrow payments, applied borrower's account account or retained in in a a suspense suspense applied to the borrower's account). If so,did didthe theservicer servicerclearly clearly communicate communicate to the account). If so, borrower that he he or or she she is is neither neither in in nor nor being being considered considered for a loss mitigation bank's acceptance acceptance of the loss mitigation program, program, and and that the bank's payment in no way affected the the status status of of the the foreclosure foreclosure that is proceeding? 9. As applicable, borrower solicited solicited for and offered a a loss loss applicable, was the borrower HAMP, government such as, those required required by by HAMP, mitigation option, such Housing Administration, sponsored sponsored enterprise, enterprise, the Federal Housing Administration, the the U.S. Veterans Administration, Administration, state-level government programs programs under Department of of Treasury, Treasury, other third party investor, or the U.S. Department servicer's servicer's loss loss mitigation mitigation and and modification modification programs? programs? To the extent applicable, has the servicer complied its loss loss extent applicable, has the servicer complied with its National Mortgage obligations detailed mitigation obligations detailed in in the National Settlement? Have any borrower borrower complaints, complaints, appeals, appeals, or escalations been considered considered and addressed? fully executed executed loan loan modification modification application application submitted by 10. Was the fully the borrower, borrower, as as defined defined by by the the applicable applicable modification modification program, reviewed by the servicer servicer as required, required, including including any timeline or notice requirements?

11. modification decision correct and validated as as required required 11. Was Was the modification by the applicable applicable modification modification program applicable, program (to (to include, as applicable, with program compliance with program requirements and accuracy of calculations and NPV test) with and application application of the NPV test) along with of any any borrower borrower appropriate appropriate resolution resolution and communication of complaint, complaint, appeal, or escalation? 12. borrower or the borrower's borrower's representative (housing 12. Was the borrower loan modification modification decision counselor or attorney) notified of the loan program or policy and rationale rationale as required required by program policy guidelines? the servicer servicer certified certified 13. If required 13. required by by a a GSE GSE or or other other investor, investor, has the to the the attorney attorney conducting conducting the the foreclosure foreclosure that that all all delinquency delinquency management requirements requirements have been met, met, including including that there there is neither an approved approved payment plan plan arrangement nor nor a foreclosure alternative offer pending pending or accepted?