By Elva Coffey-Sears
The revisions to the Mortgage Servicing Rules under RESPA and TILA released by the CFPB on August 4, 2016 were (finally) published in the Federal Register (FR) on October 19, 2016, thus establishing effective dates of October 19, 2017 for the majority of the amendments, and April 19, 2018 for the amendments relating to successors in interest and periodic statements for borrowers in bankruptcy. The 901 page (242 pages in the FR) final rule includes technical corrections and clarifications that the Bureau deems non-substantive in nature and addresses the following nine topics:
- Successors in Interest: Requires servicers to establish policies and procedures to expand the servicing protections provided to borrowers to individuals who have a legal interest in the property.
- Definition of Delinquency: Establishes specific rules for determining the date of delinquency, which is the trigger for the servicing and periodic statement provisions of the rule.
- Requests for Information: Changes response requirements for ownership information requests relating to Fannie Mae and Freddie Mac loans.
- Force-placed Insurance: Extends servicer ability to force-place insurance to situations where borrower has insufficient coverage.
- Early Intervention: Expands certain early intervention requirements to borrowers in bankruptcy and defines requirements when borrowers invoke Fair Debt Collection Practices Act rights.
- Loss Mitigation: Significantly changes loss mitigation application processes and clarifies requirements with respect to transferred loans.
- Prompt Payment Crediting: Defines expectations for treatment of payments and partial payments by consumers under temporary loss mitigation programs or permanent loan modifications.
- Periodic Statements: Implements specific content and timing rules for statements, requires provision of modified statements to borrowers in bankruptcy, and exempts statement requirement for charged-off loans, but requires additional disclosure relating to the effects of charge-off.
- Small Servicer Exemption: Clarifies that the servicing of seller-financed transactions for non-affiliates does not count toward the 5000 loan limit for the exemption.
Even though the effective date is a year out, given the significance of the impact of these amendments on servicing policies and procedures, we encourage mortgage servicers to get started now on identifying the changes needed to comply with the new requirements.
ABS is here to assist with your compliance needs! Contact us at (405) 607-7000.