35(b)(9) and 35(b)(10)
Proposed § 1024.35(b)(9) would have included as an error a servicer's failure to suspend a foreclosure sale in the circumstances described in proposed § 1024.41(g). The Bureau proposed § 1024.35(b)(9) to implement, in part, section 6(k)(1)(C) of RESPA with respect to borrower requests to correct errors relating to avoiding foreclosure and other standard servicer duties.
Proposed § 1024.41(g) provided that a servicer that offers loss mitigation options to borrowers in the ordinary course of business would be prohibited from proceeding with a foreclosure sale when a borrower has submitted a complete application for a loss mitigation option by a specified date unless the servicer denies the borrower's application for a loss mitigation option (including any appeal thereof), the borrower rejects the servicer's offer of a loss mitigation option, or the borrower fails to perform on a loss mitigation agreement. These requirements are discussed in more detail in the section-by-section analysis for § 1024.41 below.
A credit union commenter asserted that failure to suspend a foreclosure sale in the circumstances described in proposed § 1024.41(g) should not be considered an error subject to the error resolution requirements under § 1024.35 because, the commenter reasoned, a lender will delay foreclosure when there is a legitimate need to do so. Having considered the comment, and as explained with respect to § 1024.41, the Bureau continues to believe it is appropriate to prohibit a servicer from completing the foreclosure process until after a borrower has had a reasonable opportunity to submit an application for a loss mitigation option and the servicer has completed the evaluation of the borrower for a loss mitigation option, and that a borrower should be able to assert an error where a servicer fails to comply with these procedures.
The Bureau, however, is revising proposed § 1024.35(b)(9) in light of changes to proposed § 1024.41. Final § 1024.35(b)(9) defines as an error subject to error resolution requirements under § 1024.35 making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process in violation of § 1024.41(f) or (j). The Bureau has also added new § 1024.35(b)(10) which defines as an error moving for foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of § 1024.41(g) or (j).