Treble Damages for Failure To Engage in Loss Mitigation; Advance Notice of Proposed Rulemaking

Résumé

This notice announces HUD's intention to issue a proposed rule to amend HUD's Civil Money Penalty regulations to provide for damages of three times the amount of any mortgage insurance benefit claimed by the mortgagee for any mortgage as to which the mortgagee failed to engage in loss mitigation actions. Current regulations provide that HUD may initiate a civil money penalty action against mortgagees and lenders for certain prohibited conduct, including failure to service FHA insured mortgages in accordance with FHA regulations. However, in 1998, Congress amended the National Housing Act, as more particularly described below, to add a triple penalty to the existing civil money penalty system for a mortgagee's failure to engage in loss mitigation. Specifically, HUD seeks comments regarding the best regulatory procedures and structures for implementing this Congressional mandate. This notice therefore solicits public comment on the subject prior to publication of a proposed rule.