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Federal Reserve System issues supervision & regulation letter

By Shaun Ramey • Sunday, August 5, 2012

On July 11, 2012, the Board of Governors for the Federal Reserve System issued a Supervision Regulation Letter emphasizing the importance of appropriate risk management practices and controls in connection with the decision not to complete foreclosure proceedings after they have been initiated.   The Board recommended that banks notify borrowers when a decision is made not to pursue foreclosure and provide the borrowers with information regarding their right to occupy the property as well as their financial obligations regarding the outstanding loan balance, the maintenance of the property and payment of taxes and insurance.   The Board also outlined other key concepts that should be addressed in policies and procedures governing “abandoned” foreclosures.

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