FDIC Law, Regulations, Related Acts
5000 - Statements of Policy
Statement of Policy Regarding 12 U.S.C. 1825(b)(2) and 28 U.S.C. 2410(c)
To establish a uniform policy for determining when the Federal Deposit Insurance Corporation (the "Corporation"), in its various capacities, will consent, pursuant to 12 U.S.C 1825(b)(2), to permit third parties to foreclose upon mortgages and other liens where title to the affected property is held by the Corporation or the property is encumbered by a security interest held by the Corporation; to provide the consent of the Corporation pursuant to 12 U.S.C. 1825(b)(2) in certain specified instances; to establish a uniform policy regarding the assertion of the one year right of redemption and other rights which may be applicable to the Corporation, in its various capacities, pursuant to 28 U.S.C. 2410(c); and to modify, to the extent inconsistent herewith, the Corporation's Statement of Policy Regarding the Payment of State and Local Property Taxes.
2. Scope and Applicability
This policy addresses the application of 12 U.S.C. 1825(b)(2) to the Corporation in its corporate and receivership capacities, and provides that with regard to foreclosures under bona fide mortgages and other security instruments, the Corporation will not assert its rights under that section when acting as conservator, or on behalf of subsidiary corporations of receiverships and conservatorships. This policy also indicates that the Corporation will not assert any rights under 28 U.S.C. 2410(c).
This policy is limited in scope to the right of the Corporation to consent under 12 U.S.C. 1825(b)(2) to permit foreclosure actions, and the rights of the Corporation under 28 U.S.C. 2410(c). This policy shall not be construed as authorizing the waiver of the prohibitions in 12 U.S.C. 1825(b)(2) that no property of the Corporation shall be subject to levy, attachment, or garnishment, or as permitting any sale not specifically authorized in accordance with this policy, without the consent of the Corporation; nor does it authorize waiver of 12 U.S.C. 1825(b)(2)'s prohibition against any involuntary lien attaching upon the property of the Corporation.
12 U.S.C. 1825(b)(2) provides that no property of the Corporation shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation. The Corporation has received many requests for consents to foreclosure, waivers of the right to consent to foreclosure, and specific statements of the Corporation's policy with respect to that provision.
In addition, 28 U.S.C. 2410(c) provides certain protections when a federal lien or mortgage interest in property is to be extinguished through foreclosure, condemnation, partition or quiet title action. In particular, 28 U.S.C. 2410(c) provides that a sale to satisfy a lien inferior to one of the United States shall be made subject to and without disturbing the lien of the United States, unless the United States consents; and, the United States has a one year right of redemption in the case of any sale of real estate made to satisfy a lien prior to that of the United States.
4. Policy and Guidelines Regarding 12 U.S.C. 1825(b)(2)
a. Receivership and Corporate Capacities
(i) Generally. The provisions of 12 U.S.C. 1825(b) apply 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. Property of the Corporation encompasses any interest in real and personal property held by the Corporation, including security interests as well as equity interests. Therefore, no property of the Corporation shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Corporation.
(ii) Voluntary Liens Affecting Property Interests of the Corporation. It is the policy of the Corporation that it will grant its consent to permit foreclosure actions in certain instances as contemplated by 12 U.S.C. 1825(b)(2). The consent of the Corporation is granted in this policy for certain specific matters, and the Corporation will endeavor to consider other appropriate consent requests in a timely manner. More specifically:
(A) Property Interests. Where the Corporation has an interest in real or personal property, whether a lien interest as a result of a mortgage, deed of trust or other similar security instrument, or a title interest, the Corporation hereby grants its consent under 12 U.S.C. 1825(b)(2) as to any foreclosure by the holder of a consensual security interest in such property, pursuant to any bona fide mortgage, deed of trust, pledge (with respect to personalty) or other similar security instrument which is senior to the Corporation's interest.
(B) Real Property Encumbered by Government-Related Mortgage. In accordance with paragraph 4.a(ii)(A) above, where the Corporation holds title to a single family residence encumbered by a bona fide mortgage insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs, or the Farmers Home Administration, or a mortgage held by the Secretary of Housing and Urban Development, the Corporation hereby grants its consent under 12 U.S.C. 1825(b)(2) as to any foreclosure by the holder of such mortgage, deed of trust or other similar security instrument which encumbers such property.
(iii) Involuntary Liens. This policy does not permit the attachment, garnishment, execution, levy or distraint of property held by the Corporation. In accordance with 12 U.S.C. 1825(b)(2), holders of mechanics' and materialmen's claims, tax liens and other non-consensual, involuntary liens must obtain the consent of the Corporation to permit foreclosure actions affecting property in which the Corporation's interest is of record. If the Corporation's interest is not of record, the Corporation hereby grants its consent under 12 U.S.C. 1825(b)(2) as to any foreclosure by the holder of any bona fide lien which encumbers such property.
The consent of the Corporation under 12 U.S.C. 1825(b)(2) may be requested in accordance with the procedures (the "Procedures") set forth in, and as otherwise established by the Director, Division of Liquidation, pursuant to, paragraph 6 below, with the understanding that consent may be granted or withheld in the sole and absolute discretion of the Corporation.
For purposes of this policy, the interest of the Corporation shall be considered "of record" if, as of the notice date (as defined below): First, for real property, such interest appears vested in the Corporation in its corporate capacity or as receiver for a financial institution in the public land records in accordance with local law, or such interest appears vested in a financial institution for which the Corporation has been appointed receiver in the public land records in accordance with local law and the Corporation has published notice in the Federal Register that it has been appointed receiver for that financial institution; and second, for personal property, the property is in the possession of the Corporation, or the lien interest has been perfected in accordance with applicable law. Financial institutions shall include any predecessors identified in the notice published in the Federal Register. For purposes of this policy, the "notice date" shall be for judicial foreclosure actions, the date on which service of notice of the foreclosure sale has been perfected on all persons required to be provided with notice in accordance with applicable law, and for nonjudicial foreclosure actions, the date on which notice of the foreclosure sale has been given to all persons required to be provided with notice in accordance with applicable law.
(iv) Limited Effect. The effect of consents to foreclosure under 12 U.S.C. 1825(b)(2) as described above, shall be limited solely to the application of 12 U.S.C. 1825(b)(2). Such consents shall not act to waive or relinquish the rights granted to the Corporation, in any capacity, pursuant to any other applicable law (including any rights under local foreclosure statutes), or with respect to (A) any note, indebtedness, claim or other obligation that has been secured by the property, or (B) the terms of any mortgage, guaranty, security agreement or other document relating to any obligation.
Any foreclosure actions by the lienholder must still be effectuated in accordance with all other applicable laws.
Failure to obtain the consent of the Corporation where required shall not render the subject foreclosure action void or voidable, so long as the interest of the Corporation survives and is not extinguished by such foreclosure action.
b. Conservatorships and Subsidiary Corporations
The Corporation will not assert any right to consent under 12 U.S.C. 1825(b)(2) with regard to a foreclosure action relating to any property interest held by a conservatorship or a subsidiary corporation of a receivership or conservatorship. In accordance with this position, when a Corporation conservatorship, or a subsidiary of an institution, has an interest in property, foreclosure actions undertaken in accordance with applicable state law may proceed without the consent of the Corporation. In the event an interest has economic value, conservatorships and subsidiary corporations must take appropriate actions to protect their interest in the property under local foreclosure law.
It is the policy of the Corporation that in no event shall the right to consent under 12 U.S.C. 1825(b)(2) be assigned or transferred to any purchaser of property from the Corporation.
5. Policy Regarding 28 U.S.C. 2410(c)
As to any property to which section 1825(b) applies, the Corporation, in its various capacities, shall not assert any rights it might possess under 28 U.S.C. 2410(c). In no event shall any rights under 28 U.S.C. 2410(c) be assigned or transferred to any purchaser of property from the Corporation.
Where the consent of the Corporation is required hereunder, lienholders, or their authorized designee(s), shall submit to the Corporation a written request for the consent of the Corporation to the foreclosure. The request for consent shall be in writing, in the form attached hereto as Exhibit A (as it may be amended from time to time), delivered to the Corporation at the place and address specified in the Federal Register, by certified mail or as otherwise specified in the Federal Register notice. The place and address specified and the means of delivery may be subject to change from time-to-time. All amendments and changes shall be published in the Federal Register. The Director of the Division of Liquidation is hereby authorized and directed to establish and make publicly available such other procedures as the Director deems appropriate to implement this policy.
Consent requests will be ruled upon after the Corporation has gathered the necessary information, analyzed such information, and made a decision as to an appropriate course of action.
If a consent is to be granted, those parties with Power of Attorney may execute the Consent to Foreclosure form. Appearing as Exhibit B is a sample Consent to Foreclosure form for the Corporation acting as receiver. This form should be modified appropriately to reflect the Corporation's capacity or ownership interest.
7. Limitation of Actions
Consents to be granted under this policy are to be provided solely at the discretion of the Corporation. No person shall have any right to bring any action to direct or compel the granting of any consent under this policy, or to pursue any claim or cause of action based on the alleged failure of the Corporation or any person acting on its behalf to take any action whatsoever under this policy.
Subject to the limitations of paragraph 4.a.(iii) above, the Corporation will not assert any right under either 12 U.S.C. 1825(b)(2) or 28 U.S.C. 2410(c) to which it may have been entitled (in either its receivership or corporate capacity) which it agreed not to assert hereunder, with respect to any foreclosure action completed prior to the effective date of this policy. A nonjudicial foreclosure action shall be considered completed upon recordation of the trustee's deed conveying property to the purchaser at a foreclosure sale. A judicial foreclosure shall be considered completed upon entry of a final, nonappealable judgment.
This policy is not retroactive with respect to any matters in litigation on the date hereof, the continuation of which will be reviewed on a case by case basis.
Request and Information Form
[To accompany Request for Consent to Foreclose]
Instructions: This form is to be used by the holder of an involuntary or nonconsensual lien when requesting consent to foreclose in accordance with 12 U.S.C. 1825(b)(2) and Paragraph 4.a.(iii) of the FDIC Statement of Policy regarding 12 U.S.C. 1825(b)(2) and 28 U.S.C. 2410(c) (the "Policy"). In order for a Request to be valid and proper, all information must be completed (unless the form indicates that the information may be completed as available). All forms must be typewritten.
Name of Requesting Party: ____________________________________________
Address of Requesting Party: ____________________________________________
Telephone Number: ____________________________________________
(Area Code) (Number)
Relationship to Lienholder: ____________________________________________
The above named Requesting Party hereby requests the consent of the
Federal Deposit Insurance Corporation, in the appropriate capacity, to
the foreclosure of the property more particularly identified below.
Failed Institution Name: ____________________________________________
Failed Institution Information:
(Reference Number) ____________________________________________
Property Address: ____________________________________________
(City) (County) (State) (Zip Code)
Legal Description of Property: ____________________________________________
(Use extra sheet if necessary)
Legal Owner of Property: ____________________________________________
Lienholder (Foreclosing Party): ____________________________________________
Face Amount Lien/Outstanding Amount
Date of Lien
(e.g., Folio and Liber or Instrument Number)
Failed Institution Lien:
Face Amount Lien ____________________________________________
Date of Mortgage/Deed of Trust
Name of Trustee
Recording Information (e.g., Folio, Liber or Instrument Number)
Foreclosure Sale Information (If applicable)
Date of Sale: ____________________________________________
Place of Sale: ____________________________________________
Manner of Sale: ____________________________________________
Telephone Number of Contact Person: ____________________________________________
Appraised Value of Property: $ ____________________________________________
as of ____________________________________________
For FDIC Use Only
Date Received: ____________________________________________
(Month) (Day) (Year)
Assigned Account Officer: ____________________________________________
Date Response Mailed: ____________________________________________
Attach copy of response and Consent to Foreclosure (as applicable).
Consent to Foreclosure
In accordance with its rights pursuant to 12 U.S.C. 1825(b)(2) and 29 U.S.C. 2410(c), the FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), in its capacity as [insert capacity] does hereby consent to foreclosures by _______ ("Lienholder"), pursuant to that certain lien dated _______ , and recorded at _______ [city/county], among the land records in _______ _______ [state], which encumbers certain real property more particularly described in Exhibit "A" attached to and incorporated in this Consent (the "Property").
This consent is limited to the consent to foreclosures set forth above pursuant to the provisions of 12 U.S.C. 1825(b)(2) and 28 U.S.C. 2410(c), only in connection with the above-described foreclosure action. This consent does not affect the rights of the FDIC, in any capacity, pursuant to any other applicable law (including local foreclosure statutes) or with respect to (i) any note, indebtedness, claim or other obligation ("Obligation") which has been secured by the Property or (ii) the terms of any mortgage, guaranty, or agreement or other document relating to any Obligation.
Federal Deposit Insurance Corporation, as [insert capacity]
Print Name: _____________________
Title or Capacity: ____________________________________________
[Add Appropriate Notarial Acknowledgement]
By order of the Board of Directors, June 16, 1992.
[Source: 57 Fed. Reg. 29491, July 2, 1992]