Loss mitigation before you lose the house

When mortgage payments fall behind, the conversation with the bank usually feels one-way. This Act changes that at one very concrete point: the moment you hand in the loss-mitigation form in writing, the creditor cannot start the collection suit. And if the suit has already started, it must stop while you are evaluated — unless a final, firm and unappealable judgment has already been entered. It adds two more things worth memorising: the form comes from OCIF and must be available at every bank branch, and while the plan is being negotiated the creditor may not refuse your partial payments.

The Act protects the “mortgage debtor,” whom Article 2(b) defines as the natural person who took a consumer or personal-purpose loan secured by a mortgage lien on their principal residence, and includes every natural person contractually liable for that obligation. “Principal residence” is the one used as the principal home of the debtor or of the debtor and their immediate family, and which for real-property tax purposes is the one for which the principal tax exemption would apply. On the other side, “mortgage creditor” is broad: it covers lending or financial entities, banks and cooperatives, the holder or bearer of the note, and expressly the entities that administer and service the creditor — servicers.

• Be a natural person with a consumer or personal-purpose loan secured by a mortgage on your principal residence.Verified against the official source
• Submit in writing the loss-mitigation request form provided by the Office of the Commissioner of Financial Institutions.Verified against the official source
• Deliver the documents the creditor requests in writing within fifteen (15) days of receiving that request.Verified against the official source

• The OCIF-provided loss-mitigation request form, stating that your economic circumstances changed adversely and that you wish to be considered for a mitigation alternative.
• The documents and information the creditor requests in writing to complete the request and carry out the evaluation, per federal requirements.

1. 1

   Step 1: Get the form, which is not the bank’s

   A detail that avoids arguments at the counter. Article 2(e) says the request “shall be formalised by completing a form provided by the Office of the Commissioner of Financial Institutions,” and lists where it must be available: “in digital format on the web page or in print, both at the Office of the Commissioner of Financial Institutions, at the Loss Mitigation department offices and at each of the mortgage creditor’s branches.” That is, your bank is obliged to have it at the branch. The Act publishes no form number or internet address, and we do not invent them.

2. 2

   Step 2: Hand it in so there is proof

   The Act names two ways and both leave a trail, which is exactly the point: the request “shall be sent by certified mail with return receipt or delivered in person and stamped as received at the mortgage creditor’s Loss Mitigation department office.” That receipt date is what triggers the Article 3 protection, so keep the return receipt or the stamped copy as if it were the most important document in the file. Because it is.

3. 3

   Step 3: What happens the moment it is received

   Here is the heart of the Act. Article 3: “As soon as the mortgage creditor receives in writing a loss-mitigation request form from the mortgage debtor, the mortgage creditor may not begin a legal money-collection process against the mortgage debtor, regardless of the amount owed or the time elapsed without the mortgage debtor having made any payment.” And the article itself clarifies the case that matters most: within that elapsed time “are included the one hundred twenty (120) days of non-payment” that would give the creditor the chance to sue. The condition is that the mitigation process began on or before those 120 days and that you were not evaluated before within that term.

4. 4

   Step 4: If the suit has already started

   It is not too late by definition. The second paragraph of Article 3: “Where a legal money-collection and mortgage-foreclosure process has already begun, and the mortgage debtor has delivered the form requesting loss mitigation and submitted the documents required for the evaluation of their case, the legal process must stop, under the provisions of Regulation X, while the debtor’s qualification process is completed and they come to know whether they qualify or not.” Note the two conditions: form delivered and documents submitted. And the limit the same sentence sets: “The foregoing shall not apply in those cases in which a judgment has been entered by the corresponding court and it is final, firm and unappealable.”

5. 5

   Step 5: The fifteen days that are on you

   The protection is not automatic forever: part of it depends on your diligence. Article 2(e): once the creditor receives the duly completed request, it “shall request the necessary documents and information to complete the request and carry out the evaluation, per federal requirements. The mortgage debtor shall have fifteen (15) days to deliver the required documents to the mortgage creditor, counted from receipt of the written document request made by that mortgage creditor.” With those steps met, the Act says “a request shall be understood to have been duly submitted.” The fifteen days run from when you receive the written request, not from when you handed in the form.

6. 6

   Step 6: They cannot refuse a partial payment

   It is the provision most people do not know and the one that helps most while negotiating. Article 4 places three duties on the creditor: to orient you “on the loss-mitigation alternatives available at both federal and local level”; to assist you “in the process of completing the loss-mitigation request, in good faith”; and this, verbatim: “during the negotiation and adoption of the loss-mitigation plan, the mortgage creditor may not refuse to accept partial payments toward the debt.” If at the counter you are told they take nothing but the full payment, that is the line to quote. Article 6, added by Act 87-2024, charges OCIF with an orientation campaign on these rights that expressly mentions the duty to receive partial payments.

7. 7

   Step 7: What counts as loss mitigation

   The Act does not lock you into a single alternative. Article 2(d) defines loss mitigation as “any programme the mortgage creditor has available under local and federal laws and regulations that allows the mortgage debtor to make a change to their mortgage loan, whether through a Special Payment Plan, Mortgage Modification, Short Sale or Voluntary Surrender, among others.” Four named alternatives and the door left open with “among others.” Which applies to you depends on your creditor’s programmes and the federal rules, which we did not read.

8. 8

   Step 8: When the creditor may sue

   Worth knowing so a pause is not mistaken for a cancellation. Article 5: the creditor “may begin a legal money-collection and mortgage-foreclosure process, provided the loss-mitigation process established in this Act and the Regulation X processes have been completed, and the mortgage debtor has been notified, preserving the debtor’s rights already established in Regulation X to appeal any decision.” That is, the protection lasts as long as the evaluation does; once finished and notified, the judicial route reopens, and what remains is the appeal right federal regulation recognises. Article 3 further adds a safe harbour: a creditor complying with 12 CFR 1024.41, as promulgated by the Consumer Financial Protection Bureau, is understood to be in compliance with that article.

The form is provided by the Office of the Commissioner of Financial Institutions (OCIF) and must be available on its web page, at the Office itself, at the Loss Mitigation department offices and at each branch of your mortgage creditor. The request is delivered to the creditor’s Loss Mitigation department, by certified mail with return receipt or in person with a stamped record. The Act publishes no address, telephone, hours, form number or internet address, and we do not invent them.

• Asking for mitigation verbally: the protection triggers with the written form received by the creditor.
• Not keeping the return receipt or stamped copy: that date is what triggers the bar on suing.
• Believing you must go to OCIF for the form: the Act requires it also at each of the creditor’s branches.
• Letting the fifteen days pass to deliver the documents the creditor requests in writing.
• Counting the fifteen days from when you handed in the form: they run from when you receive the written document request.
• Accepting a refusal of a partial payment: Article 4 forbids the creditor that while the plan is being negotiated.
• Thinking it is too late because there is a suit: the process must stop if you delivered form and documents, unless there is a final, firm and unappealable judgment.
• Assuming the Act does not reach the servicer: Article 2(a) expressly includes whoever administers and services the creditor.

These are the government pages this guide is based on.

• Oficina del Comisionado de Instituciones Financieras (OCIF)

  OCIF

  bvirtualogp.pr.gov