On August 19, 2014, the CFPB issued a compliance bulletin and policy guidance updating and replacing its earlier guidance regarding mortgage servicing transfers. In replacing Bulletin 2013-01 (the “Original Guidance”), Bulletin 2014-01 (the “New Guidance”) reinforces the Original Guidance and adds several interesting components to the regulatory mix as a direct result of the implementation of the new Servicing Rules as well as the CFPB’s industry-related supervisory and enforcement activities over the last eighteen months. (We summarized the Original Guidance in a legal alert.)
The New Guidance sets forth two new sections. The first, entitled “General Transfer-Related Policies and Procedures,” provides expanded examples of the policies and procedures that CFPB examiners may consider in evaluating whether servicers have satisfied their transfer-related requirements successfully. Included in this section are additional details on the post-transfer policies and procedures that CFPB examiners may focus on in future examinations, including regularly scheduled calls between the transferee and transferor servicers to identify, research and resolve any loan level issues “within a few days of them being raised.” The CFPB makes clear that the examples provided “are not exhaustive and in future examinations CFPB examiners will consider a servicer’s transfer-related policies and procedures as a whole” in determining whether they are reasonably designed to achieve compliance.
The second new section, entitled “Applicability of the New Servicing Rules to Transfers,” answers frequently asked questions about how revised Regulation X applies in the area of servicing transfers and describes certain areas of focus, including how transfers may implicate requirements under:
- Error Resolution Procedures (12. C.F.R. 1024.35) and Requests for Information (12. C.F.R. 1024.36)
- Force-placed Insurance (12. C.F.R. 1024.37, 1024.17(k))
- Early Intervention (12. C.F.R. 1024.39)
- Continuity of Contact (12. C.F.R. 1024.40)
- Loss Mitigation (12. C.F.R. 1024.41)
It is important to also note that the CFPB uses the New Guidance as a platform to reinforce three broader and consistently provided messages to the servicing industry. The first is that the CFPB expects all mortgage servicers to maintain a robust Compliance Management System (“CMS”). The CFPB notes that a robust CMS ensures that violations of consumer protection laws do not occur and includes mechanisms to remedy any such violations that do occur. The second is that the CFPB is continuing to closely monitor the mortgage servicing market and may engage in further rulemaking in this area. The third is that the CFPB’s concern regarding mortgage servicing transfers remains heightened due to the continuing high volume of servicing transfers.