FDIC is clarifying supervisory expectations in existing guidance for institutions' risk-management practices for decisions to discontinue foreclosure proceedings after initiating such actions, which are commonly referred to as abandoned foreclosures

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FDIC is clarifying supervisory expectations in existing guidance for institutions’ risk-management practices for decisions to discontinue foreclosure proceedings after initiating such actions, which are commonly referred to as abandoned foreclosures

FDIC is clarifying supervisory expectations in existing guidance for institutions’ risk-management practices for decisions to discontinue foreclosure proceedings after initiating such actions, which are commonly referred to as abandoned foreclosures

Financial Institution Letters

FIL-14-2016
March 2, 2016

Discontinuation of Foreclosure Proceedings

Printable Format:

FIL-14-2016 – PDF (PDF Help)

Summary:

The FDIC is clarifying supervisory expectations in existing guidance for institutions’ risk-management practices for decisions to discontinue foreclosure proceedings after initiating such actions, which are commonly referred to as abandoned foreclosures. Institutions should have appropriate policies and practices pertaining to decisions to discontinue foreclosure actions.

Statement of Applicability to Institutions With Total Assets Under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised institutions.

Highlights:

  • Existing supervisory guidance reminds institutions of the need to establish policies and procedures for acquiring other real estate that mitigate the impact the foreclosure process has on the value of surrounding properties.
  • Institutions that initiate the foreclosure process may subsequently decide to discontinue the proceeding based on financial considerations, such as a determination that the costs to foreclose, rehabilitate, and sell a property exceed its current market value.
  • When such decisions are made after an institution has initiated foreclosure, the borrower may have already abandoned or stopped maintaining the property, which can lead to blight, crime, or an accumulation of trash, causing a negative effect on neighboring properties and the local community.
  • Institutions should have appropriate policies and practices pertaining to decisions to discontinue the foreclosure process that address:
    • Obtaining and assessing current valuation and other relevant information,
    • Releasing liens,
    • Notifying local authorities, and
    • Notifying and contacting the borrower(s).
  • FDIC Supervisory activities will include a review of institutions’ policies and practices for decisions to discontinue foreclosure proceedings.

Distribution:

  • FDIC-Supervised Institutions

Suggested Routing:

  • Chief Executive Officer, Chief Lending Officer, Chief Compliance Officer

Related Topics:

Attachment:

Contact:

  • Beverlea S. Gardner, Senior Examination Specialist, at BGardner@FDIC.gov or (202) 898-3640

Note:

FDIC Financial Institution Letters (FILs) may be accessed from the FDIC’s Web site at www.fdic.gov/news/news/financial/2016/index.html.

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies may be obtained through the FDIC’s Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).

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One Response to “FDIC is clarifying supervisory expectations in existing guidance for institutions’ risk-management practices for decisions to discontinue foreclosure proceedings after initiating such actions, which are commonly referred to as abandoned foreclosures”

  1. Felipe says:

    Have loan wiht Chase bait and swiht probe in court even wiht letter but the lawyer se fromn alvarado smiht so bad demur and demur and court allow haved two mods Pay on time still foreclousured court rescinded sale discharged in bk lost my appeal judges were talking about golfing in my case is that legal them dismis whiout court date alvaradosmiht is the lawfraud,

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