What scenario are you contemplating? RESPA applies to any lender, mortgage broker,
or mortgage servicer. There are notice requirements and specific requirements to try to work with the borrower. And putting in a loan modification application for a conventional mortgage does put foreclosure on hold. If they got it and rejected it, he's in a different situation. But tbqf, if he put in an application, he knew he was running up against foreclosure. That, and the fact he hadn't been paying....
It's probably pointless to speculate with how little we'll ever know about the origination of this loan if it never gets litigated, but first off, even in the case of conventional loans Regulation X lays out what must be a federal nexus such as 1) the loan being insured by a federal agency or GSE which many conventional loans are not, 2) the loan being funded by a federally regulated institution such as a federally chartered bank or an FDIC-insured state-chartered bank or the like, or 3) the loan being funded by a non-federally-regulated mortgage company that at least does so much annual volume as to fit TILA disclosure definitions incorporated by reference into Regulation X. This still leaves a surprisingly wide variety of smaller private lenders to which the federal loss mitigation requirements simply do not apply, hence my caveat about not only conventional loans but the narrower scenario of a boutique investment advisory firm extending secured financing to a high-value client in the course of financial planning. Admittedly I only caught some glimpses of posts describing Nick's lender that way in the fifty-page flurry this week, but if a deep dive reveals that they're big enough to at least squeeze into the third category above then so be it.
Secondly, Regulation X also
incorporates by reference Regulation Z definitions excluding applicability to any loans for a primarily business purpose, and we still don't know anything on that front yet. The mere fact that the loan happens to be secured by a mortgage on a primary residence is not determinative and it boils down to the intended use of the funds, so for example if Nick was working with a financial planner on leveraged purchase of a stock portfolio on margin, or to fall for some e-buddy's crypto rugpull, or to purchase rental property in town, or even to renovate his then-rented adjacent property, then Regulation X would not apply at all. The fact that he happened to change course after loan closing and pocketed the funds to spend on family/household purposes or coke wouldn't change that.
Thirdly just as an aside, it's notable that courts have held time and again that
RESPA is not a means to "stop" a foreclosure in the sense of affording any injunctive relief whatsoever, and it merely provides a cause of action to recover money damages. While this is a significant deterrent keeping lenders' compliance departments and outside counsel very busy, Nick would have to have been retarded to stake all his hopes on a lender's scrupulous compliance with loss mitigation best practices when his supposed rights have no real "teeth" beyond a shot at eking a settlement check out of their general liability insurer months or years
after losing a home, particularly if facts surrounding the loan origination fall in the above gray areas that defense counsel could use to wiggle out of paying anything at all. The only smart move backed by readily available injunctive relief would have been to simply beg his parents for the measly $10K-$30K of pocket change from the couch cushions that it'd take to force a
Section 580.30 reinstatement buying plenty of time to sell the vacant house without this public humiliation ever hitting the newspaper, or at the very least come up with the couple bucks of ink, paper, and postage that it'd take to force a
Section 580.07 postponement buying plenty of time to reinstate using the vacant house's sale proceeds with no risk of a closing delay ever forcing him (or mommy and daddy) to pay an accelerated balance in full. Instead he was too proud and/or too drunk to get around to either.
But then I guess what else is new, of course he'd only ever channel this guy:
Auction.” All the pictures of the interior have been replaced with one picture of the driveway.
