I. INTRODUCTION
All creditors that service loans secured by a mortgage or lien on a one-family residence (home loans) are subject to homeownership counseling requirements. The Mortgage Reform Subcommittee of the Federal Financial Institutions Examination Council Consumer Compliance Task Force developed Homeownership Counseling Examination Procedures effective June 30, 2003. A listing of approved housing counseling agencies can be found at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=NE.
II. DEFINITIONS
Several “terms of art” appear in the federal statute defining the parameters of the counseling notice requirement. “Creditor” means a person or entity that is servicing a home loan on behalf of itself or another person or entity. “Eligible homeowner” means a homeowner eligible for counseling. “Home loan” means a loan secured by a mortgage or lien on residential property. “Homeowner” means a person who is obligated under a home loan. “Residential property” means a 1-family residence, including a 1-family unit in a condominium project, a membership interest and occupancy agreement in a cooperative housing project or a manufactured home and the lot on which the home is situated.
III. NOTIFICATION REQUIREMENTS
Section 106 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. § 1701x), provides that all creditors that service conventional mortgage loans and loans insured by the United States Department of Housing and Urban Development (HUD) are subject to homeownership counseling notification requirements. A creditor must notify a homeowner who fails to pay any amount due under a home loan by the date the amount is due, of the availability of homeownership counseling. The notification must be made within 45 days from the date the payment was due, unless the homeowner pays the amount overdue before the expiration of the 45-day period.
The creditor must provide the homeowner with notification of the availability of any homeownership counseling it offers with information regarding one of the following: