The CFPB issued its final rule amending the mortgage servicing rules under Regulations X and Z. The proposal for these amendments was issued in November 2014. The amended provisions cover a wide range of topics, including the following:
- Tailored periodic statements and early intervention notices for borrowers in bankruptcy;
- Additional procedures for communicating with, and confirming, a wide variety of potential successors in interest;
- Application of loss mitigation procedures and foreclosure protections more than once over the life of the loan;
- An additional notice required upon completion of a loss mitigation application;
- Clarification of how certain requirements apply in the context of a servicing transfer; and
- Relief from the periodic statement requirement for certain charged-off loans.
Most of the provisions will go into effect 12 months after publication in the Federal Register. However, the amended provisions relating to successors in interest and periodic statements for borrowers in bankruptcy will take effect 18 months after publication.
Also of note, the CFPB issued an accompanying interpretive rule concerning the interaction of the Fair Debt Collection Practices Act (FDCPA) and the servicing rules. Characterized as an advisory opinion for purposes of the FDCPA, the interpretive rule aims to provide a safe harbor from FDCPA liability for compliance with the following requirements under Regulation X:
- The requirement to communicate with a potential successor in interest regarding an existing loan (i.e., communicating with a third party regarding a debt);
- The requirement to send early intervention notices despite a borrower’s cease communication request pursuant to the FDCPA; and
- The requirement to respond to borrower-initiated communications regarding loss mitigation, despite a borrower’s cease communication request pursuant to the FDCPA.
The Ballard Spahr Mortgage Banking Group continues to review this voluminous offering from the CFPB (just over 900 pages), and will have further comments in the near future. In addition, a webinar covering this final rule and other recent servicing developments is scheduled for Tuesday, September 13th.