On August 4, 2016, the CFPB published a final rule that amends the Bureau’s Mortgage Servicing Rules, which went into effect in 2014. In addition to a number of technical corrections to servicing-related provisions of Regulations X and Y, the final rule updates the Mortgage Servicing Rules in the following substantive ways:
- Updates the requirements for servicers communicating with borrowers who have applied for loss mitigation;
- Requires servicers to give the protections of the loss mitigation rules to certain borrowers more than once during the life of their loan;
- Provides additional protections for successors in interest;
- Expands the definition of successor in interest;
- Requires servicers to provide information to potential successors in interest about the documentation needed to confirm their status;
- Ensures that confirmed successors in interest are given access to many of the same notices and documents that the original borrower would have received;
- Provides additional information to borrowers in bankruptcy;
- Provides borrowers in bankruptcy with periodic statements in certain circumstances, with specific information tailored for bankruptcy;
- Provides borrowers in bankruptcy with a modified early intervention notice to let them know about loss mitigation options;
- Provides flexibility for servicers to comply with certain force-placed insurance requirements;
- Finalizes a general definition of delinquency that applies to all of the servicing provisions of Regulation X and the provisions regarding periodic statements for mortgage loans in Regulation Z;
- Clarifies the treatment of periodic payments made by consumers who are performing under temporary loss mitigation programs or permanent loan modifications;
- Clarifies the early intervention live contact obligations of servicers;
- Clarifies various periodic statement disclosure requirements; and
- Clarifies the small servicer exemption.
The full text of the final rule can be found here. The majority of amendments will go into effect 12 months after publication in the Federal Register; however, the amendments regarding successors in interest and periodic statements for borrowers in bankruptcy will go into effect 18 months after such publication.
At the same time that it updated the Mortgage Servicing Rules, the Bureau concurrently issued an interpretive rule that addresses the interaction of the Fair Debt Collection Practices Act with the Mortgage Servicing Rules. The interpretive rule can be found here.
As a mortgage banking focused law firm, AMLG routinely advises its clients who engage in servicing operations. If you need assistance with understanding and interpreting the new servicing requirements, updating your policies and procedures to comply, and/or with any other servicing-related legal or compliance issues, please contact Managing Member James Brody by clicking here.