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Mortgage Servicing and Loan Modifications: 12.3.6.4.1 Generally

HUD has provided specific options for borrowers facing long-term, COVID-19-related hardships and has amended them several times during the pandemic. On April 1, 2020, HUD issued Mortgagee Letter 2020-06 that implemented the COVID-19 Standalone Partial Claim for borrowers with pandemic related hardships who fall behind on their loans. In response to consumer advocates, HUD expanded the options through Mortgagee Letter 2020-22 on July 8, 2020 and provided further updates through Mortgagee Letter 2021-05 on February 16, 2021.

Mortgage Servicing and Loan Modifications: 12.3.6.4.3 COVID-19 Standalone Partial Claim

The COVID-19 Standalone Partial Claim allows owner-occupant borrowers who can afford their pre-forbearance monthly payments to become current with a zero percent interest loan from HUD that is recorded as a mortgage and is generally payable at the end of the loan term. The partial claim brings their loan current by covering full principal, interest, taxes, and insurance (PITI) payments. It is the same as a standard FHA partial claim except that borrowers do not need to submit financial information to access it.

Mortgage Servicing and Loan Modifications: 12.3.6.4.4 COVID-19 Recovery Modification

If the owner-occupant borrower indicates that a payment pursuant to the COVID-19 Standalone Partial Claim is not affordable, the servicer should then evaluate the borrower for the COVID-19 Recovery Modification (Recovery Modification).397 The Recovery Modification combines a loan modification and a partial claim in order to target a 25% reduction in the borrower’s monthly principal and interest payment from its pre-hardship level.398 The targeted payment reduction makes the Recovery Modification

Collection Actions: 1.5.2 Debt Buyers Identified

Debt buyers come in all shapes and sizes. The CFPB estimates that there are about 330 debt buyers in the United States, and that the majority of these entities are small.41 However, most collection lawsuits are brought by large corporate debt buyers that do business on an enormous scale, often collecting debts under a variety of names. Today’s largest debt buyer is probably Encore Capital Group (Encore), which operates under the names Midland Funding, Midland Credit Management, and Asset Acceptance Capital Corporation.

Collection Actions: 1.5.3 The Nature of Debt Sales to Debt Buyers

A debt buyer typically purchases thousands of accounts per sale from a creditor or another debt buyer. This group of accounts is called a “portfolio.” Debt may be grouped into portfolios based on the type of accounts, length of time since default, or the number of prior collection placements.44 Sellers typically market portfolios of debt for sale and prospective buyers bid on those portfolios.45

Collection Actions: 1.1.2 Topics Covered in This Treatise

This treatise assists attorneys in the representation of consumers sued on credit card, medical, and other consumer debts. In recent years, there has been an explosion in not only the number of consumer debts being enforced in courts, but in the number of such actions in which the consumer does not owe the debt, the consumer has substantial defenses, or the creditor has no reliable evidence as to whether the consumer owes the debt.

Collection Actions: 1.5.1 Dramatic Growth in Debt Buying

Attorneys representing consumers in collection cases must consider the implications of the dramatic growth of the debt buying industry. A large portion of collection lawsuits are brought by a debt buyer, not the original creditor.

Collection Actions: 1.2.6 Additional Digital Pleadings, Practice Tools, and Primary Source Materials

The digital version includes pleadings and discovery, practice tools, and primary source materials. They are listed under the “Companion Materials” tab of the “Contents” pane on the left side of the screen and are fully searchable. Search filters allow users to search across “Pleadings and Discovery,” “Primary Sources,” and/or “Practice Tools.” The user can then use a number of additional filters to further narrow search results.

Collection Actions: 1.3 Additional NCLC Resources

This treatise comprehensively covers a consumer’s rights when the consumer is sued in a collection action or where the consumer’s income or property is subject to seizure for an unsecured debt. However, this treatise cannot cover all areas of consumer debt. This treatise should be read in conjunction with other NCLC treatises, which cover certain special types of collections or consumer rights regarding debt.

Collection Actions: 1.2.1 Debt Defense Checklist

Section 1.4, infra, is a debt defense checklist that, for a given type of debt and phase of collection, immediately links the user to appropriate material to review. It is recommended that readers use the digital version of the debt defense checklist because it contains live links that will speed up access to the relevant material.

Collection Actions: Listing of Provisions

50 U.S.C. §§ 3901–4043 (formerly cited as 50 U.S.C. App. §§ 501–596)

[As enacted by Pub. L. No. 108-189, 117 Stat. 2835 (2003), unless otherwise noted]

Title 50—War and National Defense

* * *

Chapter 50—Servicemembers Civil Relief Act

Sec.

3901. Short title

3902. Purpose

3911. Definitions

3912. Jurisdiction and applicability of Act

3913. Protection of persons secondarily liable

Collection Actions: Listing of Provisions

50 U.S.C. §§ 3901–4043 (formerly cited as 50 U.S.C. App. §§ 501–596)

[As enacted by Pub. L. No. 108-189, 117 Stat. 2835 (2003), unless otherwise noted]

Title 50—War and National Defense

* * *

Chapter 50—Servicemembers Civil Relief Act

Sec.

3901. Short title

3902. Purpose

3911. Definitions

3912. Jurisdiction and applicability of Act

3913. Protection of persons secondarily liable

Collection Actions: Listing of Provisions

This appendix reprints 31 C.F.R. §§ 212.1 to 212.12 and apps. A, B, and C (effective May 1, 2011) as promulgated by 76 Fed. Reg. 9939 (Feb. 23, 2011) and amended by 78 Fed. Reg. 32,099 (May 29, 2013).

Title 31—Money and Finance—Treasury

* * *

Chapter II—Fiscal Service, Department of the Treasury

Subchapter A—Bureau of the Fiscal Service

* * *

Student Loan Law: Listing of Provisions, Source, and Authority

The Consumer Financial Protection Bureau (CFPB) now has authority to issue Regulation Z and its commentary. See Pub. L. No. 111-203, tit. X, §§ 1100A, 1100H, 124 Stat. 1376, 2107 (July 21, 2010). On December 21, 2011, the CFPB issued its version of Regulation Z and its commentary. The Federal Reserve Board (FRB) has not withdrawn its version of Regulation Z and its commentary, certain kinds of credit are not within the CFPB’s enforcement authority, and the FRB regulation thus may remain relevant.

Student Loan Law: Listing of Provisions, Source, and Authority

TITLE 34—EDUCATION

SUBTITLE B—REGULATIONS OF THE OFFICES OF THE DEPARTMENT OF EDUCATION

CHAPTER VI—OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION

PART 600—INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT OF 1965, AS AMENDED

SUBPART A—GENERAL

34 C.F.R. sec.

600.1 Scope.

600.2 Definitions.

600.3 [Reserved]