On December 2, 2016, a Florida court issued an opinion in Palma v. JPMorgan Chase Bank regarding requirements to foreclose on a home. The homeowner in this particular case obtained her home through a Federal Housing Administration (FHA) loan. As part of her loan, the wording expressly incorporates federal Housing and Urban Development (HUD) provisions. Using HUD requirements on an FHA loan is pretty standard, but some creditors are unaware of the additional rights afforded to homeowners by incorporating HUD regulations.
Requiring a Face-to-Face Interview in FHA Loans
The HUD regulation at issue in Palma required that the lender have a face-to-face meeting with the homeowner before she missed three monthly payments on her mortgage. The purpose of the meeting is to create another payment arrangement that will work for both parties. It is designed to decrease foreclosures and force lenders to work with homeowners so that they are more likely to keep their homes.
The face-to-face interview is supposed to be conducted within 30 days of default on the loan. The lender also cannot foreclose on the home for at least 30 days after the face-to-face meeting. Now, according to Palma, it is more important than ever to be aware of these provisions and follow them carefully.
Palma Enforces Homeowner Rights Against Lenders
In Palma, the homeowner did not have this required meeting with her lender. In fact, the mortgagor did not even ask to arrange such a meeting. She noted that she would have agreed to meet with the lender if they had asked.
Her attorney argued that because the lender did not meet the requirement to have an interview, it could not foreclose on the home based on the terms of the agreement. At first, the lower court sided with the lender. However, on appeal, the higher court determined that the lender must have this face-to-face meeting before it can foreclose. In that case, then, the foreclosure was set aside.
Palma is important because no other Florida court has determined the following the face-to-face interview provision of HUD regulations is required before a foreclosure can begin.