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Mortgage Lending: § 34.47 Enforcement.

Institutions and institution-affiliated parties, including staff appraisers and fee appraisers, may be subject to removal and/or prohibition orders, cease and desist orders, and the imposition of civil money penalties pursuant to the Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq., as amended, or other applicable law.

Mortgage Lending: § 34.61 Purpose and scope.

This subpart, issued pursuant to section 304 of the Federal Deposit Insurance Corporation Improvement Act of 1991, 12 U.S.C. 1828(o), prescribes standards for real estate lending to be used by national banks in adopting internal real estate lending policies.

Mortgage Lending: § 34.62 Real estate lending standards.

(a) Each national bank shall adopt and maintain written policies that establish appropriate limits and standards for extensions of credit that are secured by liens on or interests in real estate, or that are made for the purpose of financing permanent improvements to real estate.

(b) (1) Real estate lending policies adopted pursuant to this section must:

(i) Be consistent with safe and sound banking practices;

Mortgage Lending: Introduction

The Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Dodd-Frank Act), significantly alters the preemptive effect of Office of the Comptroller of the Currency (OCC) regulation of national banks for mortgage loans extended after July 21, 2010. See Appx. E.2, supra.

Mortgage Lending: Post-Dodd-Frank Act

Interpretive Letter No. 1155 (Sept. 17, 2015). Ohio law is not consistent with 12 U.S.C. § 548 (providing that, for purposes of state tax law, national banks shall be treated as a bank organized and existing under the laws of the state within which its principal office is located), because the state provides Ohio-charted state banks with a tax credit for assessments paid to the Ohio Division of Financial Institutions but does not provide a similar credit to national banks.

Mortgage Lending: Pre-Dodd-Frank Act

Interpretative Letter No. 1106 (Oct. 10, 2008). Georgia law permitting out-of-state banks to do trust business in the state so long as they have their deposits insured and requiring reciprocity is preempted. South Carolina law requiring a business presence in the state and written approval to conduct trust business is preempted. Florida law mandating a higher level of pledged securities than the OCC requires is preempted.

Mortgage Lending: Introduction

The Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Dodd-Frank Act), significantly alters the preemptive effect of Office of the Comptroller of the Currency (OCC) regulation of national banks for mortgage loans extended after July 21, 2010. See Appx. E.2, supra.

Mortgage Lending: Pre-Dodd-Frank Act

Preemption Determination, 68 Fed. Reg. 46,264 (Aug. 5, 2003). Neither national banks nor their operating subsidiaries that are engaging in business in Georgia must abide by any of the provisions of the original or amended Georgia Fair Lending Act.

Preemption Determination, 66 Fed. Reg. 51,502 (Oct. 9, 2001). Certain provisions of the West Virginia Insurance Sales Commission Protection Act are preempted; other provisions are not preempted.

Consumer Class Actions: 15.5.10 How and When to Object

15.5.10.1 Filing the Objection

In addition to checking local rules or standing orders for filing objections, an objector should be sure to carefully follow the provisions for objecting that are contained in the order granting preliminary approval, and should also review the class notice and settlement agreement—even if these provisions go beyond local procedures (and they usually do)—in order not to lose an objection on a technical flaw, such as filing the objection too late.

Mortgage Servicing and Loan Modifications: 7.3.2 Payment Deferral

In March of 2020, the GSEs announced the creation of a new payment deferral option to assist borrowers with short-term defaults who cannot afford a payment plan.134 Subsequently, the GSEs announced deferrals for pandemic and disaster related defaults, which are distinct from the general payment deferral and are covered elsewhere.135 The GSEs created the payment deferral in order to assist borrowers who have recovered from short-term hardships and who can afford to restart their pre-hardship

Mortgage Servicing and Loan Modifications: 7.3.2 Payment Deferral

In March of 2020, the GSEs announced the creation of a new payment deferral option to assist borrowers with short-term defaults who cannot afford a payment plan.135 Subsequently, the GSEs announced deferrals for pandemic and disaster related defaults, which are distinct from the general payment deferral and are covered elsewhere.136 The GSEs created the payment deferral in order to assist borrowers who have recovered from short-term hardships and who can afford to restart their pre-hardship paym

Mortgage Servicing and Loan Modifications: 7.5.4 Relief Options

Relief options allow borrowers to gradually pay back delinquent amounts or temporarily reduce the amount of the mortgage payment or temporarily stop making mortgage payments. All relief options must result in the borrower bringing their mortgage current or paying the mortgage in full. Freddie Mac will consider proposals from servicers on behalf of borrowers who do not meet the eligibility requirements for a proposed relief option if the relief option is the best possible solution to cure the delinquency.263

Home Foreclosures: 16.1 An Overview of the Process

All states have statutes that authorize both the creation of a lien against real property when taxes on the property are not paid and the enforcement of this lien by a sale of the property.1 These statutory schemes are not uniform. Nevertheless, enough common features exist to permit some generalizations. While a detailed comparison of state property tax laws is beyond the scope of this treatise, this chapter discusses the basic legal principles involved in the real estate tax and enforcement process.

Home Foreclosures: 16.2.1 Property Assessment

The first step in the taxation process is the determination or assessment of the value of the real property, in accordance with the method of valuation used in the jurisdiction. Some jurisdictions assess at full value while others use a percentage of full value.11 It should be noted, however, that merely because property is assessed at full value for tax purposes does not mean that the actual tax is higher than the tax in a jurisdiction using a percentage assessment. It is the tax rate that determines the amount of the tax.

Home Foreclosures: 16.2.2.2 Mortgage Holder Liability for Unpaid Taxes

Due to a mortgage holder’s negligence or malfeasance, a homeowner who is paying real estate taxes in escrow to the mortgage servicer will sometimes nevertheless receive notice of a tax delinquency or sale. Tax escrow payments may have been misdirected, lost, or retained by the servicer. When this occurs, further investigation is necessary to find out whether payments were sent in a timely fashion by the mortgage holder or its servicer to the taxing authority.26

Home Foreclosures: 16.2.3.2 Notification of Tax Sale

At some point following a period of nonpayment of property taxes, the tax obligation becomes a lien on the property. In some states, a lien for the tax obligation may arise automatically upon assessment even without a delinquency. If the outstanding taxes are not paid or the tax lien is not discharged by payment, the taxing authority will generally initiate the first “notification” stage of the tax sale process.

Home Foreclosures: 16.2.3.3.1 Types of tax sales

There are three different approaches taxing authorities generally use to dispose of tax liens during the “tax sale” stage following nonpayment of taxes by homeowners: sale at auction, negotiated bulk sale, and sale involving securitization.40 The auction method was the only method used until the 1990s, and it remains the most common tax sale procedure today.

Home Foreclosures: 16.2.3.3.2 Bidding procedure at tax sale auctions

Unlike traditional auction sales and mortgage foreclosure sales, potential buyers at a tax sale in most states do not bid based on the value of the property. This is because state law may require that the property be sold for no more than the amount of unpaid taxes, interest, fees, penalties, and related costs. In states that do not permit the property to be sold for more than the unpaid taxes, there is generally no competitive, value-based bidding such as might exist at other auction sales.

Home Foreclosures: 16.2.3.3.3 Negotiated bulk sales

Negotiated bulk sales are the second way taxing authorities sell off tax liens. This involves the pooling of delinquent tax liens which are then sold as a package at a discount to a private entity. The local government relinquishes its ability and obligation to collect on the tax liens. The private entity essentially steps into the shoes of the taxing authority and becomes the owner of the liens.

Home Foreclosures: 16.2.3.3.4 Sales involving securitization

The final method available to taxing authorities is similar to a bulk sale but is done through the securitization process. Officials in Jersey City, New Jersey, pioneered this method in 1993, and it initially became popular with large cities having cash-flow problems. In most securitization cases, the municipality creates a trust which purchases the tax liens at a discount. After the purchase, the trust issues bonds backed by the liens. The taxing authority receives a portion of the proceeds from the bond sale.

Home Foreclosures: 16.3.1.1 Overview

It may be possible to avoid a tax lien and eventual sale by obtaining a reduction of property taxes through an abatement or exemption before the taxes become delinquent. Homeowners may pay too much in property taxes either because the assessment of their property is too high or because they have not taken advantage of available tax relief programs or exemptions.64 By successfully challenging an excessive assessment the homeowner can reduce their tax burden accordingly.

Home Foreclosures: 16.3.1.2.1 Assessment exceeds taxable value

Subject to the limitations of local statutes and case law, there are basically two grounds on which a property assessment can be contested: the assessment exceeds the property’s taxable value, or the property is disproportionately assessed. For special tax assessments that are created under loan programs, such as the Property Assessed Clean Energy (PACE) program that provides financing for energy efficiency improvements, it may be possible to challenge the assessment on other grounds if the assessment was obtained fraudulently.65