Attachment 

Minimum Standards for Prioritization and Handling 

Borrower Files with Imminent Foreclosure Sale 

(April 23, 2013) 

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Operating standards for scheduled foreclosure sales 

The minimum standards set forth in this guidance reflect sound business practices that should 

be part of a mortgage servicer's ongoing collections, loss mitigation and foreclosure processing 

functions. Accordingly, the Federal Reserve requires that all state member banks, bank and 

savings and loan holding companies (including their non-bank subsidiaries), and U.S. branches 

and agencies of foreign banking organizations that service residential mortgage loans 

incorporate this guidance into their ongoing business processes. Failure to comply with this 

guidance may result in unsafe and unsound banking practices, non-compliance with foreclosure 

related consent orders, as applicable, and/or require rescission of completed foreclosures. 

Purpose This guidance confirms the minimum standards for the handling 

and prioritization of borrower files that are subject to an imminent 

(within 60 days) scheduled foreclosure sale. The purpose of this 

guidance is to ensure that borrowers will not lose their homes 

without their files receiving, at a minimum, a pre-foreclosure sale 

review conducted under the standards listed in this guidance, 

which also help to ensure loan modifications were considered as 

appropriate. 

Servicers of residential mortgages should use these review and 

validation standards to determine whether a scheduled foreclosure 

sale should be postponed, suspended or cancelled due to critical 

foreclosure defects in a borrower's file. These minimum review 

criteria are intended to ensure a level of consistency across 

servicers, not to supplant review and validation procedures that go 

beyond these minimums. Servicers that currently apply more 

than these minimum standards as part of their own pre-foreclosure 

sale review and validation procedures are expected to continue to 

do so. 

These standards are not intended to incorporate the final rules 

amending Regulation X and Regulation Z issued by the 

Consumer Financial Protection Bureau (CFPB) on January 17, 

2013, and effective on January 10, 2014, which govern mortgage 

servicers' loss mitigation and foreclosure processing functions. 

The Federal Reserve expects that all servicers will undertake 

appropriate action in a timely manner to ensure their practices 

will be compliant with the new rules by the effective date. 
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Overview Servicers of residential mortgages should monitor all borrower 

files in the foreclosure process on at least a weekly basis to 

determine if a foreclosure sale is scheduled within the next 60 

days. The servicer should implement procedures to perform and 

document a timely pre- foreclosure sale review according to the 

criteria set out in this guidance and appropriately postpone, 

suspend or cancel the scheduled foreclosure sale when warranted. 

The servicer will promptly determine whether the borrower is 

currently in an active loss mitigation program or is being actively 

considered for or has requested consideration under the Home 

Affordable Modification Program (HAMP) or other modification 

or loss mitigation program as further defined in standard number 9 

below, and whether further foreclosure proceedings and/or the 

scheduled foreclosure sale should be postponed, suspended or 

cancelled as required by program standards as applicable. 

The following standards are a non-exhaustive list of criteria for 

which an exception would warrant postponement, suspension or 

cancellation of a foreclosure sale until the Minimum PreForeclosure Sale Review Standards are satisfied. As noted 

above, individual servicers may apply additional 

standards/criteria to postpone, suspend or cancel a scheduled 

foreclosure sale. 

Any negative response to the Minimum Pre-Foreclosure 

Review Standards detailed below will be considered a critical 

defect (except for standard number 7 where a positive response 

is a defect) and should cause the servicer to postpone, suspend 

or cancel a scheduled foreclosure sale. 

Independent control functions (such as audit, compliance, and 

risk management) should confirm and document servicer 

adherence to their own servicing standards/criteria and the 

minimum standards in this guidance through a program of 

monitoring, sampling, and testing of scheduled and completed 

foreclosure sales. 
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Minimum 

Pre-Foreclosure Sale 

Review Standards 

Date of the scheduled foreclosure sale: [ blank space for the date] 

Once the date of foreclosure is established, the servicer needs to 

confirm the following information before foreclosing: 

1. Is the loan's default status accurate? 

2. Does the servicer have and can demonstrate the appropriate 

legal authority to foreclose (documented assignments, note 

endorsements, and other necessary legal documentation, as 

applicable)? 

3. Have required foreclosure notices or other required 

communications to the borrower or others, as applicable, been 

provided in a timely manner? 

4. Has the servicer taken all steps necessary to confirm whether 

the borrower, co-borrower, and all obligors on the mortgage, 

trust deed, or other security in the nature of a mortgage are 

entitled to protections under the Servicemembers Civil Relief 

Act (SCRA), including running queries through the 

Department of Defense database? If the borrower, coborrower, or other obligor is subject to SCRA protections, has 

the servicer complied with all applicable legal requirements to 

foreclose? 

5. Determine whether the borrower is in an active bankruptcy. 

If so, does the servicer have documented legal authority to 

foreclose? 

6. Determine whether the loan is currently under loss mitigation 

or other retention review or such review has been requested by 

the borrower as part of the foreclosure process. If so, did the 

servicer notify the borrower that all conditions necessary to 

effect the loss mitigation or retention action have not been met, 

what is needed to meet those conditions, and the date necessary 

to cure the deficiencies to avoid further foreclosure action? If a 

borrower submitted a complete loan modification application 

after the foreclosure referral, did the servicer comply with any 

applicable dual track restrictions? 

7. Is the borrower currently in an active trial loss mitigation plan? 
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8. Determine whether the servicer accepted any payment from the 

borrower in the preceding 60 days (that is, were borrower 

payments, including interest, principal, fees, or escrow 

payments, applied to the borrower's account or retained in a 

suspense account). If so, did the servicer clearly communicate 

to the borrower that he or she is neither in nor being considered 

for a loss mitigation program, and that the servicer's 

acceptance of the payment in no way affected the status of the 

foreclosure that is proceeding? 

9. As applicable, was the borrower solicited for and offered a loss 

mitigation option, such as, those required by HAMP, 

government-sponsored enterprises (GSEs), Federal Housing 

Administration (FHA), U.S. Department of Veterans Affairs 

(VA), state-level government programs under U.S. Department 

of Treasury, other third party investor, or the servicer's loss 

mitigation and modification programs? To the extent 

applicable, has the servicer complied with its loss mitigation 

obligations detailed in the National Mortgage Settlement? 

Have any borrower complaints, appeals, or escalations been 

considered and addressed? 

10. Was the fully executed loan modification application submitted 

by the borrower, as defined by the applicable modification 

program, and reviewed by the servicer as required, including 

any timeline or notice requirements? 

11. Was the modification decision correct and validated as required 

by the applicable modification program (to include, as 

applicable, compliance with program requirements and 

accuracy of calculations and application of the net present 

value (NPV) test) along with appropriate resolution and 

communication of any borrower complaint, appeal, or 

escalation? 

12. Was the borrower or the borrower's representative (such as, 

housing counselor or attorney) notified of the loan modification 

decision and rationale as required by the applicable loss 

mitigation program or these standards? 

13. If required by the GSE or other investor, has the servicer 

certified to the attorney conducting the foreclosure that all 

delinquency management requirements have been met, 

including that there is neither an approved payment plan 

arrangement nor a foreclosure alternative offer pending or 

accepted?