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76 CONTACT WITH THE MORTGAGOR On the other hand, 24 CFR §203.604 has more detailed requirements for contact with the mortgagor. Under Title 24, Part 203, governs Single Family Mortgage Insurance and it is divided into three parts: Subpart A, which specifies eligibility requirements and underwriting procedures for HUD insured loans; Subpart B, which outlines contract rights and obligations between the mortgagee and e Commissioner; and Subpart C which details servicing responsibilities. Subpart C contains §203.604, entitled Contact with the Mortgagor, which specifically states that, "the mortgagee must have a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting." ere are two specific deadlines during which the face-to-face interview must occur, depending on the status of the loan. Generally, the interview must occur, "before three full monthly installments due on the mortgage are unpaid." However, "if default occurs in a repayment plan arranged other than during a personal interview," then the deadline is, "within 30 days after such default and at least 30 days before foreclosure is commenced." Title 24 defines default as the, "fail[ure] to make any payment or to perform any other obligation under the mortgage, and such failure continues for a period of 30 days." In addition, the date of default is defined as 30 days after the first failure to make a monthly payment or otherwise perform under the contract. e lender has only a four-month window to show compliance with the notification requirement. THE PATH OF LEAST RESISTANCE: COMPLIANCE In order to comply, the mortgagee must either have a face-to-face interview or make a reasonable effort to arrange such a meeting, unless one of the exceptions applies. ere are five exceptions: 1) the mortgagor does not reside on the property; 2) the property is not within 200 miles of the mortgagee, its servicer or a branch of either; 3) mortgagor has clearly indicated that he will not cooperate in the interview; 4) a repayment plan is entered into and payments thereunder are current; and 5) the reasonable effort to arrange a meeting is unsuccessful. For loans being referred to foreclosure, the repayment plan exception will not apply because the borrower will not be current on their payments. e most used exceptions are that the borrower does not live on the property, no branch within 200 miles and that a reasonable effort to arrange a meeting was unsuccessful. e reasonable effort exception, however, is commonly misunderstood. A reasonable effort is explicitly defined as the sending of at least one letter and making one trip to see the mortgagor at the mortgaged property. A lender is normally in possession of proof of the letters sent to the mortgagor. Generally, obtaining proof of the letters to the mortgagor is not the hurdle, it is obtaining proof of the trip to the mortgaged property. is can be especially difficult for loans that are subsequently service released or sold. e trip to the property is required unless the property is more than 200 miles of the mortgagee or the mortgagor doesn't reside in the property. Recently, litigation has centered around the method by which the letter is sent. In order to comply, the letter must be, "certified by the Postal Service as having been dispatched." e Eleventh Circuit, governing Florida, Georgia and Alabama, has held that while a letter sent via Federal Express with delivery confirmation did not strictly comply with the certified mail requirement, it was enough for substantial compliance. Various sections of Title 24 and the National Housing Act specify that failure to service FHA insured mortgages in accordance with the regulations may result in a civil penalty action filed by the Mortgagee Review Board or withdrawal of HUD's approval of the mortgagee. e question becomes, what, if anything, can a borrower do if he or she feels that the mortgagee has failed to comply with HUD regulations. DO BORROWERS HAVE STANDING TO ENFORCE? DEPENDS ON THE STATE "e National Housing Act and the regulations promulgated thereunder deal only with the relations between the mortgagee and the government, and give the mortgagor no claim to duty owed nor remedy for failure to follow … No evidence exists demonstrating that Congress intended to create a private cause of action under the National Housing Act." Roberts v. Cameron–Brown Co. "e Court assumes without deciding that [borrower] may assert claims based on [bank's] failure to comply with these HUD Regulations." Rourk v. Bank of Am. Nat. Ass'n. ese two decisions aptly demonstrate the confusion surrounding this issue. Courts throughout the country are widely split not only whether the issue can even be raised, but also to what extent it can be raised. Some courts refuse to recognize claims regarding compliance with HUD regulations altogether. Other courts have allowed a borrower to bring a breach of contract claim for failure to comply with HUD regulations clearly referenced in the mortgage. e Middle District of Florida rejects borrowers-claims altogether, finding that the National Housing Act, "does not expressly confer a right upon mortgagors, and there is no basis to conclude that Congress intended to imply a private cause of action." e First and the Fourth District Courts of Appeal in Florida allow the issue to be raised as an affirmative defense, but reject the contention that compliance with HUD regulations is a condition precedent. While the Fifth DCA has not issued a written opinion, it recently Per Curiam affirmed a trial court's determination that compliance with HUD regulations can be raised as an affirmative defense. It is clear that there is still much to be decided as it pertains to a borrower's ability to challenge compliance with HUD regulations. As the case law in this area of law emerges, perhaps it will shed more light on this otherwise murky issue. "As defense counsels compete for clients, one of the most recent and effective strategies to prolong foreclosure actions is alleging failure to comply with borrower counseling requirements on FHA loans as mandated by HUD regulations."

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