Lexology-

In the home mortgage industry, loans insured by the Fair Housing Authority (“FHA”) come with statutory prerequisites that are embedded in the loan contracts and that must be followed prior to foreclosure. One such obligation put forth by the Department of Housing and Urban Development (“HUD”) is the “face-to-face meeting” requirement. This meeting, however, is not required in several scenarios, including when the mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either.

The bounds and application of those two words – branch office – bring us to a recent opinion handed down on December 18 by the U.S. District Court for the Western District of Virginia. There, on a motion to dismiss for failure to state a claim, the Court defined a “branch office” as “one where some business related to mortgage is conducted” and dismissed the complaint with prejudice.

The borrower had brought suit claiming improper foreclosure on her home because the lender failed to offer, attempt, or conduct a face-to-face meeting prior to foreclosing on the subject property. The borrower alleged that the exemption did not apply because there was an office of the lender within 200 miles of the property. It was undisputed that this office was not open to the public and did not provide services related to mortgage origination or servicing.

[LEXOLOGY]

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