Modernization of Engagement With Mortgagors in Default: Partial Extension of Compliance Date, 92033-92034 [2024-27077]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Rules and Regulations]
[Pages 92033-92034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27077]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 203

[Docket No. FR-6353-N-03]
RIN 2502-AJ66


Modernization of Engagement With Mortgagors in Default: Partial 
Extension of Compliance Date

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, U.S. Department of Housing and Urban Development (HUD).

ACTION: Final rule; partial extension of compliance date.

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SUMMARY: This document extends the compliance date for certain 
provisions of HUD's final rule entitled ``Modernization of Engagement 
with Mortgagors in Default'' that require mortgagees to conduct 
meetings with all mortgagors in default. This requirement includes 
borrowers who do not reside in the mortgaged property and with 
mortgagees where the relevant property is not within 200 miles of the 
mortgagee, its servicer, or a branch office, which were excepted under 
HUD's existing regulation for conducting meetings with mortgagors in 
default. The compliance date for these provisions is extended until 
July 1, 2025. HUD is taking this action to permit mortgagees sufficient 
time to update their mortgage servicing processes and procedures to 
comply with the policy that will be established in a forthcoming 
mortgagee letter entitled ``Modernization of Engagement with Borrowers 
in Default.''

DATES:  The compliance date for the final rule amending 24 CFR 203.604, 
published August 2, 2024, at 89 FR 63082 as it applies to certain 
mortgagors and properties is extended until July 1, 2025. See 
SUPPLEMENTARY INFORMATION for more information.

FOR FURTHER INFORMATION CONTACT: Elissa Saunders, Director, Office of 
Single Family Asset Management, Office of Housing, Department of 
Housing and Urban Development, 100 South Charles Street, Bank of 
America Building, Tower II, 11th Floor, Baltimore, MD 21201; telephone 
number 202-402-2378 (this is not a toll-free number). HUD welcomes and 
is prepared to receive calls from individuals who are deaf or hard of 
hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background

    On August 2, 2024, HUD published a final rule entitled 
``Modernization of Engagement with Mortgagors in Default'' (FR-6353-F-
02), available at 89 FR 63082. The final rule revises requirements in 
24 CFR 203.604 for mortgages insured pursuant to part 203, except for 
mortgages insured on Indian Land pursuant to section 248 of the 
National Housing Act. The effective date of the final rule is January 
1, 2025.

II. Partial Extension of Final Rule Compliance Date

    Mortgagees are not required to comply until July 1, 2025, with the 
provisions of the Modernization of Engagement for Mortgagors in Default 
final rule that require mortgagees to conduct meetings with mortgagors 
who do not reside in the mortgaged property and where the relevant 
properties are not within 200 miles of the mortgagee, its servicer, or 
a branch office, which mirror the two exceptions currently codified in 
24 CFR 203.604(c).
    As revised by the Modernization of Engagement with Mortgagors in 
Default final rule, 24 CFR 203.604(a)(3) will require that ``[a] 
reasonable effort to arrange a meeting with the mortgagor shall consist 
of, at a minimum, two

[[Page 92034]]

verifiable attempts to contact the mortgagor utilizing methods 
determined by the Secretary.''
    Mortgagees have repeatedly stated that they require sufficient time 
to update their processes and procedures, including making updates to 
their information technology, staff training, internal standard 
operating procedures, revisions to contracts, and mortgagor-facing 
documents and communication. Mortgagees have also stated the need for 
adequate time to update their internal quality controls, hire 
additional staff, align their procedures for HUD's new requirements 
with requirements from other Federal agencies, establish new contracts 
for specific outreach methods, and update internal documentation 
requirements, among other things.
    Given that HUD has not yet provided guidance on complying with the 
revised requirements to 24 CFR 203.604(a)(3) to enable Mortgagees to 
begin adjusting their processes and procedures, HUD is partially 
extending the compliance period for the Modernization of Engagement 
with Mortgagors in Default final rule until July 1, 2025, to permit 
mortgagees to continue to rely upon two exceptions to the meeting 
requirements that exist in Sec.  203.604(c) as it is currently 
codified.
    The two additional exceptions that mortgagees may continue to rely 
upon are that a meeting with the mortgagor is not required if:
    (1) The mortgagor does not reside in the mortgaged property; and
    (2) The mortgaged property is not within 200 miles of the 
mortgagee, its servicer, or a branch office of either.
    HUD believes that this partial extension of the compliance period 
will allow mortgagees sufficient time to implement the guidance in the 
forthcoming Modernization of Engagement with Borrowers in Default 
Mortgagee Letter \1\ and to ensure mortgagee compliance with the 
revised requirements in 24 CFR 203.604. Mortgagees may optionally elect 
to comply with the entirety of the Modernization of Engagement with 
Mortgagors in Default final rule beginning on January 1, 2025, the 
effective date of the rule.
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    \1\ When the Modernization of Engagement with Borrowers in 
Default Mortgagee Letter is published, it will be accessible at 
https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee until incorporated into the Single Family Housing Policy 
Handbook 4000.1.

Julia R. Gordon,
Assistant Secretary for Housing, Federal Housing Commissioner.
[FR Doc. 2024-27077 Filed 11-20-24; 8:45 am]
BILLING CODE 4210-67-P