A Michigan homeowner is 45 days delinquent on her mortgage. Her lender is a federally regulated institution. Under current federal regulations applicable in Michigan, what is the minimum delinquency period that must pass before the lender may initiate foreclosure proceedings?
Correct Answer
A) 120 days, because federal CFPB mortgage servicing rules prohibit servicers from initiating foreclosure until the borrower is more than 120 days delinquent
Under the Consumer Financial Protection Bureau (CFPB) mortgage servicing rules (12 CFR 1024.41), a mortgage servicer generally may not make the first notice or filing required for foreclosure until a borrower is more than 120 days delinquent. This federal rule applies to all federally regulated lenders and servicers operating in Michigan. Since the homeowner is only 45 days delinquent, the lender cannot yet initiate foreclosure proceedings.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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