On March 2, 2016, the FDIC issued clarification of their supervisory expectations of financial institutions’ risk management policies concerning the discontinuation of foreclosure proceedings, commonly referred to as “abandoned foreclosures.”
Financial Institutions must establish a policy and procedure for when such decisions to abandon a foreclosure are made which address the negative impact on the borrower and the community. The FDIC’s Supervisory activities will be reviewing that such policies and procedures contain processes by which the institution will:
• Obtain and assess current valuations and other relevant information
• Release liens
• Notify local authorities
• Notify and contact the borrower(s)
