Face-to-Face Meeting Requirement Before Foreclosure Satisfied by Letter and Visit to Arrange Later Meeting

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The United States Court of Appeals for the First Circuit has held that, where a foreclosing mortgagee is required by HUD regulations incorporated into the mortgage, to make reasonable efforts to hold a face-to-face meeting with a borrower before foreclosure, there is no requirement that those efforts to arrange such a meeting must be made by someone with the “qualifications or authority to conduct a face-to-face meeting for the purpose of resolving mortgage delinquencies.”  Donahue v. Federal National Mortgage Association

Plaintiff executed a mortgage in 2010, on which she defaulted in 2014.  In 2016, Ocwen Loan Servicing, LLC (“Ocwen”) sent a letter to Donahue informing her of the default and notifying her of a forthcoming foreclosure sale.  Ocwen further sent an agent to her property in February 2016 to advise Donahue of her opportunity to have a face-to-face interview with an Ocwen representative, and the agent further left a “doorknocker” with that same information.  No face-to-face meeting occurred.

Following a foreclosure auction, Donahue sued Ocwen alleging, in part, that Ocwen failed to make reasonable efforts to arrange a pre-foreclosure meeting.  The United States District Court for the District of Massachusetts granted summary judgment to Ocwen, and Donahue appealed.

Donahue’s sole argument regarding reasonable efforts was to assert that Ocwen failed because the agent sent to her home, who left the doorknocker, was not himself qualified to conduct the face-to-face meeting.  The First Circuit rejected this argument.  While the FHA handbook states that reasonable efforts include “at least one visit to the property…for which at least one of the reasons for the visit must be to conduct an interview with the mortgagor,” when read in context, that regulation does not require that the person sent to arrange the interview must himself or herself be qualified to conduct such an interview.

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