Today the CFPB finalized the final mortgage servicing rules update that it proposed at the end of 2014. The rule adds new protections for mortgage borrowers in financial distress, including provisions that require servicers to:
- Provide some borrowers with foreclosure protections more than once over the life of the loan;
- Provide protections to an expanded universe of successors in interest upon the death of a borrower;
- Provide more information to borrowers in bankruptcy;
- Notify borrowers when their loss mitigation applications are complete;
- Comply with specific timing requirements for loss mitigation activities when servicing rights are transferred;
- Avoid wrongful foreclosures by refraining from pursuing those actions until loss mitigation applications are properly dispositioned;
- Comply with clear timing requirements for borrower delinquencies.
The final rule also addresses force-placed insurance and periodic disclosure requirements.
Concurrently with that final servicing rule, the CFPB issued an interpretive rule under the federal Fair Debt Collections Practices Act (FDCPA), to address its interplay with the new servicing rules and their requirements related to certain borrower communications.
Most of the new requirements will become effective one year following their publication in the Federal Register, so their effective date will likely be in the fall of 2017. The requirements addressing successors in interest and periodic statements for borrowers in bankruptcy will become effective 18 months after publication.
Mayer Brown will issue a detailed analysis of the new provisions in an upcoming Legal Update.