On Thursday, December 11, 2025, the Federal Housing Administration (FHA) issued a waiver of certain language in section III.A.2.d.ii(A) of the Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1). The waived language was introduced in Mortgagee Letter (ML) 2025-06, Updates to Servicing, Loss Mitigation, and Claims. That ML was updated and replaced by ML 2025-12, Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options, which became effective on October 1, 2025.

The provision that has now been waived affected how partial payments are applied to mortgages in default and how the date of default is determined. Specifically, the language could be interpreted to require the date of default to remain unchanged even when sufficient partial payments were received to satisfy a full monthly payment. This interpretation caused confusion for mortgagees attempting to comply with FHA requirements.

FHA determined that the language in ML 2025-12 could be read as inconsistent with the Department of Housing and Urban Development’s (HUD’s) regulations at 24 CFR § 203.331, which explains how to calculate the date of default, and 24 CFR § 203.556, which governs the return of partial payments. As a result, HUD will not enforce compliance with the provision that has now been waived, and mortgagees should service mortgages as though the waived provision had never been in effect.

FHA has updated its Extensions and Variances Automated Requests System (EVARS) to align with this waiver. Mortgagees may consider EVARS denials prior to December 15, 2025, for the extension of time to initiate foreclosure related to advancing the date of default approved.

FHA believes this waiver enhances clarity and consistency in FHA’s default-related servicing requirements. FHA encourages borrowers to make payments to bring their mortgages current and avoid foreclosure; therefore, it is important that payments made on defaulted mortgages, including partial payments, allow the date of default to advance. This helps ensure the continued stability of the Mutual Mortgage Insurance Fund (MMIF).

Interested parties are encouraged to review the Handbook 4000.1 waiver of date of default language in section III.A.2.d.ii(A) “Application of Partial Payments Totaling a Full Monthly Payment under Partial Payments for Mortgages in Default”.

The waiver will be incorporated into a future version of Handbook 4000.1.

Mortgagees and other interested parties are encouraged to contact the FHA Resource Center with any questions.

FHA INFO 2025-59

By James AR Pocklington, Esq

McCalla Raymer Leibert Pierce, LLP *

USFN Member (AL, CA, CT, FL, GA, IL, KY, MS, NV, NJ, NY, OH, OR, PA, TX, WA)

              The Connecticut Appellate Court recently issued its long-awaited decision in U.S. Bank N.A. v. Israel Melcon, et al (234 Conn. App. 667). The factual situation giving rise to Melcon was an issue of first impression for the Connecticut courts and had the possibility to redefine Connecticut foreclosure judgment procedure. 

              As the reader may be aware, under Connecticut’s Strict Foreclosure process, the court enters a judgment, selects dates that act as the last chance of a borrower and subsequent encumbrancers to resolve the action (called the Law Day or Law Days), and title vests automatically in the foreclosing Plaintiff the following business day. Significant litigation has occurred over the years regarding this process and various court rules, particularly timelines to appeal either the foreclosure judgment or court action on later requests to postpone a vesting. 

This gave rise to what is now known as the “three-strike-rule,” which provides that after denial of two extension requests, there is no further appeal periods without specific action by the movant. In practice, this leads courts to automatically extend a vesting, even on the denial of the first and second motion, as title cannot vest during an appeal period. 

Melcon asked the question “What happens when the court doesn’t?”

              In Melcon, judgment entered on August 29, 2022, with title to vest May 3, 2023 (after various delays). On May 1, 2023, defendants moved to extend, which the court denied that day; without extending the Law Days or issuing an articulation explaining its reasoning. After subsequent motion practice, the trial court took the position that the Law Days were tolled, and that while title did not vest on May 3, 2023, due to the appeal period from the denial, it later vested on May 24, 2023. In so doing, the trial court attempted to create a new way of handling denied Motions and to not need to specify the new Law Days. The trial court felt that, under a tolling theory, title had vested absolutely, that it was stripped of jurisdiction, and defendants had no further recourse. They appealed.

              The Appellate Court ordered further articulation from the trial court, which laid out the trial court’s novel tolling theory. Argument was held on January 15, 2025. Over the following eight months, the Appellate Court occasionally dropped the briefest mention in other decisions, using the word tolling (which to this point, was not part of Connecticut foreclosure jargon). Ultimately the decision was released on August 26, 2025, and the trial court was found to have erred.

              Central to the Appellate Court decision was the concept of notice. The Appellate Court was challenged by the idea of an automatic tolling resulting in parties, especially unsophisticated homeowners, not knowing the exact date of their Law Day and when vesting would occur. The Appellate Court left open the door for the possibility of later changes to the rules that permitted automatic reset with a footnote that “We observe that the Rules Committee of the Superior Court remains free to amend the text of the relevant rules as it deems appropriate” but focused most of its attention on the equitable nature of foreclosures and the need to ensure notice and transparency.

              Ultimately, the Appellate Court landed on the soundbite that “We cannot endorse any result that permits a law day to pass silently” and remanded the matter to the trial court for further proceedings. While this effectively killed the tolling theory as used by the trial court, it asked important procedural questions that will likely find foothold in other cases in the future.

              From a Connecticut practitioner perspective, the reliance on proper notice as the tipping point for the Appellate Court cannot be understated. For those trial courts that separate action on the motion and the new Law Days, or those courts where the notice of the new dates are delayed, Melcon presents a chilling warning. For those attorneys who see a judge deny a postponement request and choose not to set new dates, Melcon is a call to action to have a date set as soon as possible, and proper notice sent.

Copyright © 2025 USFN

USFNews - Dec. 17, 2025

* Denotes firm is a 2024 USFN Award of Excellence recipient

By Kathryn H. Kellam (Katie), Esq.

BWW Law Group, LLC *

USFN Member (DC, MD, VA)

On September 16, 2025, USFN held an installment of its briefing series focusing on various emerging topics in the REO/Eviction sphere of the default industry. Both new and seasoned professionals gained valuable knowledge from the panel, which focused on national and state-based themes. The goal of the session, titled “REO/Eviction Refresher & Hot Topics Under a New Administration,” was to touch on the fundamentals of this practice area and enlighten attendees on current issues affecting post-sale processes nationwide.

Roy A. Diaz (Diaz | Anselmo) moderated the panel. He was joined by panelists Joe Hawk (Walentine O’Toole, LLP), Stuart Gordon (McCalla Raymer Leibert Pierce, LLP), and William R. Jarrell (Aldridge Pite, LLP). All of the panelists brought an abundance of knowledge and information to the virtual briefing space and created a plethora of opportunities for future in-depth discussions regarding the evolving post-sale landscape.

The panel kicked off with a discussion of legislative efforts aimed at squatters in REO properties. Legislatures across the country have passed new laws detailing expedited procedures for removing squatters from properties, which is welcome news when it comes to handling REO portfolios. Many of the new laws went into effect in July of 2025. Traditionally, laws throughout the nation have favored squatters. However, the presence of squatters blocks vacant properties from being marketed, sold, or rented in a timely fashion. Lawmakers have taken note of the delays that occur as a result of squatters, with worsening housing supply shortages in a constrained market bringing some of these issues to the forefront.

Vexatious Litigants are another area of recent legislative concern on which the panel focused. Repeated baseless filings by borrowers and related parties continue to delay closings and evictions in the months after a foreclosure sale. A handful of states have recently explored passing litigation to curb the problems brought on by such litigants, including the unnecessary delays and great expenses of handling lawsuits and counter-claims brought by these individuals. While only a few states have passed legislation so far, including California, Illinois, and Nevada, other legislatures are working through proposed legislation on this topic, which could serve to curb the frivolous motions, delays, and abusive tactics of vexatious litigants nationwide.

In order to effectively handle post-sale matters, the panel turned to a refresher of the REO and Eviction processes, focusing on post-pandemic trends and emerging compliance considerations under the new presidential administration. This discussion was well-tailored to professionals of varying experience levels, as the panel touched on the basics of what happens post-foreclosure sale and the myriad of issues that could arise at each step in the process, especially as there are lingering backlogs from pandemic and new tenant protection statutes that have been passed in many jurisdictions. The panel also addressed the evolving landscapes of the CFPB, HUD, Veterans Affairs, and the USDA, opining on what lies ahead for the agencies for the remainder of 2025 and into 2026.

Finally, the panel shed light on issues that arise with third party vendors assisting with REO properties and recommended best practices for their use. The panel highlighted the need for strong indemnity provisions and to ensure that vendors understand state specific limits – as a one-size-fits-all 50-state approach is often ineffective when it comes to post-sale matters.

As the panel noted, “[t]he REO and eviction space is being reshaped by policy, politics, and public sentiment.” Proactive strategies, good legal foresight, and staying well-informed of developments in this area of law are the keys to success in managing REO portfolios in the months and years to come. USFN continues to provide vital educational resources to help the industry meet these challenges. For more on upcoming briefings, compliance events, and digital tools—including the USFN Source platform—visit usfnevents.org or explore the member directory to connect with experts in this space.

By Maria Tsagaris, Esq

McCalla Raymer LeibertPierce, LLP *

USFN Member (AL, CA, CT, FL, GA, IL, KY, MS, NJ, NV, NY, OH, OR, PA, TX, WA)

And Travis Menk, Esq.

Brock &Scott, PLLC *

USFN Member (AL, CT, DC, FL, GA, KY, MA, MD, ME, MI, NC, NH, NJ, OH, PA, RI, SC, TN, VA, VT, WV)

USFN submitted a formal comment in response to the Middle District of North Carolina’s proposed Model Chapter 13 Plan § 8.3 and Local Rule 4001-1(e). The proposed plan and rule if enacted could also expose mortgage servicers to significant legal risk both within North Carolina and across the country.

I. Legislative Overreach: A Challenge to Federal Law and Judicial Authority

At the heart of USFN’s concern is the improper expansion of local judicial authority. Under Federal Rule of Bankruptcy Procedure 9029, local courts may only establish rules governing “practice and procedure.” However, USFN argues that the Middle District’s proposals do much more: They effectively legislate new substantive rights and obligations for mortgage creditors, infringing upon the role of Congress and federal regulatory agencies such as the CFPB.

In support of its position, USFN points to In re Klemkowski, 664 B.R. 681 (Bankr. D. Md. 2024), in which the court declined to mandate that servicers provide online account access to debtors in Chapter 13. The court explicitly acknowledged that any requirement of that nature must come from Congress or a regulatory agency — not the judiciary.

Yet, Section 8.3(d) of the proposed model plan states:

“The Holder shall send to the Debtor a Periodic Monthly Statement, each month, either by mail or electronically as requested by the debtor.”

This requirement, USFN notes, directly conflicts with 12 C.F.R. § 1026.41 which grants servicers, not borrowers, the discretion to determine how periodic statements are delivered. The proposed mandate, according to USFN, exceeds the scope of permissible rulemaking and violates the Rules Enabling Act (28 U.S.C. § 2075), which prohibits the judiciary from modifying substantive rights via rule.

II. Operational Risks and National Impact for Creditors

Mortgage servicers operate on a national scale, often managing loans in multiple states and districts. The proposed plan and rule would impose local-specific obligations — such as providing online payment portals and continuing non-bankruptcy statement formats — that many servicers are not currently equipped to meet.

Implementing these changes would require extensive and costly overhauls to servicing systems, which are typically not designed to reflect individualized bankruptcy requirements across multiple jurisdictions. Moreover, applying different rules for just one of the 94 federal districts could inadvertently create systemic risks.

USFN references the CFPB’s 2024 enforcement action against VyStar Credit Union, where inadequate technical systems and mismanagement of borrower communications led to significant regulatory penalties. The lesson, according to USFN, is clear: When system demands exceed operational capacity, borrower harm and regulatory exposure follow.

While the model plan includes a sentence intended to shield creditors from liability in attempting to comply, USFN argues this protection is too limited and fails to cover the broader risks, especially for servicers operating outside the Middle District.

III. Lack of Uniformity and National Conflict

Article I, Section 8 of the U.S. Constitution gives Congress the exclusive power to establish “uniform Laws on the subject of Bankruptcies.” USFN warns that by enacting these provisions through a local rule and plan, the Middle District undermines this constitutional principle.

Furthermore, inconsistencies between the proposed plan language and the local rules create confusion. For example:

• Section 8.3 applies specifically to mortgage claims in Chapter 13, while Local Rule 4001-1(e) appears to extend requirements to all secured claims in all bankruptcy chapters, including automobile loans.
• The local rule mandates online access and statement delivery “in the same manner as existed prepetition,” whereas the model plan merely requires “online access to make payments.”
• The rule mandates delivery of non-bankruptcy customer statements, while the plan seems to reference periodic statements under TILA, which may not apply to all loan types (e.g., open-end credit lines like HELOCs).
  
  

This framework, USFN argues, not only complicates compliance but also increases the risk of unintended violations of federal law, particularly for national banks and servicers.

IV. The Need for a Deliberate, Collaborative Process

USFN emphasized that major changes to bankruptcy processes should be made through a deliberative legislative or national rulemaking process, not by a local rule or plan. Historically, significant reforms — like those to national plan forms or the Bankruptcy Code — undergo years of stakeholder consultation, public comments, and congressional or Supreme Court approval.

In contrast, the Middle District’s proposed changes represent a fundamental departure from established practices without adequate time for industry input or adjustment. This rapid implementation risks not only legal invalidity but also significant disruption to national servicing standards.

Conclusion and Call for Revisions

In its conclusion, USFN respectfully urged the Court and the Rulemaking Committee of the Middle District of North Carolina to revisit and revise Model Plan § 8.3 and Local Rule 4001-1(e). It called for a framework that aligns with existing federal law, preserves the constitutional separation of powers, and reflects the operational realities of mortgage servicers.

USFN encouraged ongoing dialogue to ensure that bankruptcy procedures remain fair, practical, and legally compliant.

Copyright © 2025 USFN

USFNews - Nov. 5, 2025

Associate Member a360inc, a leading provider of technology and outsourcing solutions for the legal and financial services industries, appoints Rob Pajon as Senior Vice President of Client Product Management. With more than two decades of leadership experience in mortgage technology, servicing, and SaaS growth, Pajon brings a unique blend of product vision, operational insight and marketing to this newly created role to lead a360inc’s product strategy.

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ProVest, a leading provider of process serving solutions, powered by Associate Member a360inc, has appointed Scott Wittosch as the Director of Credit Collections Business Development. With over a decade of experience in building relationships with collection litigators and a strong background in payment processing, Wittosch brings valuable expertise to drive growth in this critical sector.

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This is the final month of our USFN 2024 Award of Excellence Spotlights. USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients. While we are taking a break to reformat the awards program, we look forward to awarding and recognizing recipients in 2026.

McCalla Raymer Leibert Pierce, LLP

1.      USFN member: Since 1988

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: Since its inception.

4.      Why is the AOE Award important to your firm?
We’re incredibly proud to be recognized with this honor. Beyond celebrating our team’s hard work and dedication, the AOE reflects how important industry involvement is to all of us at MRLP. It affirms and underscores our commitment to setting the highest standard of excellence for our clients and our industry.

5.     Why is USFN Membership important to your firm?
USFN membership keeps us connected to the pulse of the industry. It’s about having a seat at the table, building relationships, and creating opportunities. Membership opens doors to valuable networking, collaboration, and advocacy that help our firm stay ahead of the curve.

USFNews - Oct. 8

This is the final month of our USFN 2024 Award of Excellence Spotlights. USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients. While we are taking a break to reformat the awards program, we look forward to awarding and recognizing recipients in 2026.

Tiffany & Bosco, P.A.

1. USFN member: Since 1988
2. First AOE recognition: No
3. How many AOE Awards has your firm won: Since its inception.
4. Why is the AOE Award important to your firm?
   The USFN Award of Excellence recognizes our Firm's commitment to excellence within the mortgage banking community. Tiffany & Bosco, P.A. prides itself on making significant contributions to the mortgage industry’s continuing education, staff development, and strengthening client relationships. This achievement is an acknowledgment of the importance of these contributions and always striving to be an industry leader.
5. Why is USFN Membership important to your firm?
   USFN is one of the nation’s oldest trade associations of law firms that focus on mortgage default and related mortgage banking legal services. Tiffany & Bosco, P.A. has been a USFN member since its beginning. We are proud to continue to be a member firm of an established, premier industry organization that emphasizes professionalism, industry participation in regular educational programs and discussion of industry issues, as well as philanthropic involvement in each of our communities.

This is the final month of our USFN 2024 Award of Excellence Spotlights. USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients. While we are taking a break to reformat the awards program, we look forward to awarding and recognizing recipients in 2026.

Kivell, Rayment & Francis, P.C.

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Brock & Scott, PLLC

1.      USFN member: 11 years

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: At least 8 years

4.      Why is the AOE Award important to your firm? Brock & Scott is honored to once again receive the USFN Award of Excellence. This award is and has been a testament to our firm's unwavering commitment to the mortgage banking industry. The Award of Excellence not only validates our consistent engagement and contributions to USFN's programs and publications, but it also reflects our dedication to upholding the rigorous standards of excellence that USFN has championed for over 30 years. It signifies our active participation in not only the industry but our local communities as well, reinforcing our reputation for quality education, active networking, thought leadership and strong partnerships. This award further signifies our dedication to best serving our clients through continuous improvement and unceasing commitment to not only meeting, but exceeding industry expectations, especially as it relates to meeting the needs of our clients

5.   Why is USFN Membership important to your firm? As a USFN member, we're part of an elite group of the most knowledgeable, reputable, and dedicated firms in the country. This affiliation provides our firm with access to outstanding educational resources, invaluable networking opportunities, and essential publications that keep us at the forefront of legal and regulatory compliance. Our active participation within USFN ensures that we're continuously enhancing our expertise and insights, directly benefiting our clients by enabling us to provide the most effective and efficient legal services for all their mortgage banking needs. The USFN's dedication to industry advocacy also enables us to lend an active hand in ensuring the industry, and our clients remain, not only viable, but best in class. Ultimately, our USFN membership is a testament to our commitment to excellence, continuous professional development, and our unwavering ability to provide comprehensive and cutting-edge legal counsel to financial institutions in the mortgage servicing industry.

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

McCabe, Weisberg & Conway, LLC

1.      USFN member: 3 years

2.      First AOE recognition: Yes

3.      Why is the AOE Award important to your firm? It is recognition from a peer group of our commitment to the industry, our colleagues and our clients.

4.      Why is USFN Membership important to your firm? Working with colleagues and clients to improve and protect our industry is a privilege that our firm values.

McCalla Raymer Leibert Pierce, LLP, (USFN Member – AL, CA, CT, FL, GA, IL, KY, MS, NV, NJ, NY, OH, OR, PA, TX, WA) is thrilled to announce the addition of Steven Sacks, Esq., as Deputy General Counsel, effective May 19, 2025. With 25 years of experience in the legal and mortgage servicing industries, Sacks brings a wealth of knowledge, strategic insight, and a proven track record of success that will further enhance MRLP’s commitment to providing best-in-class legal services to its clients.

Sacks spent a dozen years as litigation and compliance counsel for bank and non-bank clients before transitioning into senior leadership roles at PNC Bank, Fifth Third Bank, and USAA, where he led teams responsible for operational governance, compliance management, risk management, and business controls in both performing and default servicing environments. His perspective and experience in operations, risk and controls, change management, and vendor oversight will be instrumental as MRLP continues to adapt to the evolving needs of its clients.

USFN Report - Summer 2025

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Diaz | Anselmo

1.      USFN member: 8 years

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: 7

4.      Why is the AOE Award important to your firm?
The USFN Award of Excellence represents more than just recognition; it reflects a deep commitment to professionalism, innovation, and leadership within the mortgage servicing industry. For me, it serves as a benchmark of quality and collaboration — values that are essential to delivering the highest standard of service in a field that is constantly evolving.

5.      Why is USFN Membership important to your firm?
It demonstrates a shared dedication to ethical practices, continuous improvement, and meaningful contributions to the industry. It’s a symbol of trust and excellence that inspires our firm to stay actively engaged in shaping the future of our profession.

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Rosenberg & Associates, LLC

1.      USFN member: 9 years

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: 8

4.      Why is the AOE Award important to your firm?
Our firm works hard to make an impact in our industry. The AOE Award recognizes our time and effort.

5.      Why is USFN Membership important to your firm?
USFN provides our firm with an environment to collaborate ideas, make significant contributions, and stand out as a leader within the default servicing field.