Federal Reserve Board Provides Guidance on Abandoned Foreclosures

Federal Reserve Mortgage Servicing

The Federal Reserve Board recently issued a supervisory letter advising covered banking institutions about risk management practices related to decisions not to complete foreclosure proceedings after they have been initiated. The letter advises covered institutions that their policies and practices governing abandoned foreclosures should include (i) notification to borrowers, (ii) extensive communication methods comparable to those used when attempting to collect payment, (iii) notification to local authorities, and (iv) a process for obtaining information about collateral value of the property.