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Each depositor insured to at least $250,000 per insured bank

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5000 - Statements of Policy



STATEMENT OF POLICY ON FORECLOSURE CONSENT AND
REDEMPTION RIGHTS

Background

12 U.S.C. 1825(b), the codification of section 15(b) of the Federal Deposit Insurance Act (FDIA), was added by section 219 of FIRREA. Section 1825(b) dealt with the immunity from state taxation enjoyed by the FDIC under section 15 of the FDIA applied when the FDIC acted in its receivership capacity. The section also protected receivership property from both involuntary alienation as well as involuntary liens.

Since the passage of FIRREA, the Corporation has received many requests for consent to foreclosure, waivers of the right to consent, interpretation of the scope of section 1825(b)(2) and its applicability, and specific explication of the Corporation's policy. After analysis, the Corporation has determined that in the interests of promoting efficiency in the Corporation's operations, providing certainty as to title upon foreclosure, and minimizing the impact the statute has on the secondary mortgage market in general, with respect to voluntary liens, the Corporation would, pursuant to its statement of policy, grant the consent required pursuant to section 1825(b) and, as to any property to which section 1825(b)(2) applies, state it will not assert any rights to which it may have been entitled pursuant to 28 U.S.C. 2410(c). The Corporation also has determined that it will continue to require holders of involuntary liens to obtain the Corporation's consent prior to foreclosing pursuant to an involuntary lien, provided the interest of the FDIC in the liened property is of record.

Scope and Applicability

The policy statement applies to the Corporation in its corporate and receivership capacities. It confirms that section 1825(b) applies to all property held by the Corporation acting as receiver or in its corporate capacity, including property of the financial institutions for which the Corporation has been appointed receiver or property which the Corporation holds for liquidation.

The policy statement further confirms that property of the Corporation encompasses any interest in real and personal property held by the Corporation, including security and equity interests. This is consistent with the Corporation's Policy Statement on the Payment of State and Local Property Taxes, which holds that section 1825(b)(2) covers both the Corporation's fee and lien interests in property. The statement of policy also makes clear that section 1825(b)(2) applies to both tax and non-tax liens.

The policy statement does not authorize, and shall not be construed as authorizing the waiver of the prohibitions in 12 U.S.C. 1825(b)(2) against levy, attachment, garnishment, or sale of property of the Corporation, nor does it authorize or shall it be construed as authorizing the attachment of any involuntary lien upon the property of the Corporation.

Policy and Guidelines

Section 4.a.(ii)(A) of the policy statement provides that where the Corporation holds a lien interest as a result of a mortgage, deed of trust or other similar security instrument, consent is granted to the holder of a consensual security interest which is senior to the Corporation's interest. Similarly, consent is also granted where the Corporation holds a title interest.

Section 4.a.(ii)(B) of the policy statement is a specific case of the general policy set forth in section 4.a.(ii)(A). Subsection (B) does not expand the consent granted under subsection (A), but, in light of the large number of mortgages insured or held by the Federal Housing Administration, the Department of Veterans Affairs, the Farmers Home Administration and the Secretary of Housing and Urban Development, the policy specifically refers to these organizations in order to make clear that it applies to interests they hold.

The statement of policy is explicitly limited to the application of 12 U.S.C. 1825(b)(2). The consents granted under the statement of policy do not act to waive or relinquish any rights granted to the Corporation, in any capacity, pursuant to any other applicable law or any agreement or contract. By way of example without limitation, if any local law requires notice to a property owner prior to foreclosure, or if a loan agreement provides notice shall be given, the consent granted under the policy statement will not act to excuse such requirement to give notice.


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