Georgia Department of Banking and Finance Adopts Mortgage Servicing Rules
The State of Georgia Department of Banking and Finance (“the Department”) has adopted rules regarding mortgage servicing standards and records retention, effective July 19, 2017.
Mortgage Servicer Standards
These standards apply to persons licensed, registered, or required to be licensed or registered under Article 13 of Chapter 1 of Title 7 of the Official Code of Georgia Annotated.
Any person who services a mortgage loan:
- Shall act with reasonable skill, care, and diligence;
- Shall not charge fees for:
- – Handling borrower disputes;
- – Facilitating routine borrower collections;
- – Arranging repayment or forbearance plans;
- – Sending borrowers notice of nonpayment;
- – Updating records to reinstate a mortgage loan; and
- – Late payment in excess of the initial late payment fee, as provided by 12 C.F.R. § 1026.36(c)(2).
- Shall not commence a foreclosure process while a borrower’s complete loss mitigation application is pending (“dual-tracking”);
- Shall not conduct a foreclosure sale before evaluating the borrower’s complete loss mitigation application;
- Shall consider loss mitigation whenever possible;
- Shall have a process for borrowers to appeal loss mitigation disputes;
- Shall have an error resolution process for all borrowers, unless expressly excluded pursuant to 12 C.F.R. § 1024.35(g);
- Shall apply payments to the principal and interest first, rather than the insurance, taxes, and fees of the mortgage loan, except where inconsistent with federal law;
- Shall not assess on a borrower any charge or fee related to force-placed insurance, unless the servicer has a reasonable basis to believe the borrower has failed to comply with the mortgage contract’s requirements to maintain insurance; and
- Shall not obtain force-placed insurance for a borrower that imposes an unreasonable charge or fee related to the force-placed insurance.
Each servicer shall submit reports of condition to the Nationwide Multistate Licensing System and Registry, in accordance with O.C.G.A. § 7-1-1004.1, detailing the number of mortgage loans serviced, the delinquency status of mortgage loans serviced, the number of mortgage loan modifications, and the number of foreclosures.
Each servicer shall disclose to borrowers, at the time a servicer acquires the right to service the mortgage loan:
- Complete and current schedule of servicing fees;
- The name, address, and a collect call or toll-free telephone number for an employee or department of the servicer that can be contacted by the borrower regarding servicing; and
- A statement of the mortgage servicer standards set forth in paragraph (2) of this Rule including a description of the servicer’s appeal process as required by paragraph (2)(f).
Each servicer shall disclose to borrowers, upon the transfer of its right to service a mortgage loan within the period of time required by federal law, the following subsequent disclosures:
- The effective date of the transfer of servicing;
- The name, address, and a collect call or toll-free telephone number for an employee or department of the transferee servicer that can be contacted by the borrower to obtain answers to servicing transfer inquiries;
- The name, address, and a collect call or toll-free telephone number for an employee or department of the transferor servicer that can be contacted by the borrower to obtain answers to servicing transfer inquiries;
- The date on which the transferor servicer will cease to accept payments relating to the mortgage loan and the date on which the transferee servicer will begin to accept such payments. These dates shall either be the same or consecutive days;
- Whether the transfer will affect the terms or the continued availability of mortgage life or disability insurance, or any other type of optional insurance, and any action the borrower must take to maintain such coverage; and
- A statement that the transfer of servicing does not affect any term or condition of the mortgage loan other than terms directly related to the servicing of the loan.
Failure to adhere to these standards may result in revocation of license or registration and will subject the licensee or registrant to fines.
Mortgage Servicer Location Requirement and Minimum Retention Period
The rule requires each servicer to maintain required books, accounts, and records at the principal place of business, unless the department is first notified in writing if the records are to be maintained elsewhere. Maintaining these documents at a location other than the principal place of business, without written notification to the department, may result in suspension of license or registration.
Books, accounts, and records maintained at a location other than the principal place of business shall be made available to the department within five (5) business days from the date of written request by the department and at a reasonable and convenient location acceptable to the Department.
The penalty for refusal to permit an investigation or examination of books, accounts, and records (after a reasonable request by the department) shall be revocation of license or registration.
Minimum Requirements for Books and Records
Each servicer must maintain copies of all documents required by Chapter 80-11-3, a list of all servicer’s violations as set forth in Rule 80-11-6-.02, and a servicer file for each mortgage loan that it services.
Failure to maintain the books, accounts, and records may result in suspension of license or registration.
For the full text of the Notice of Final Rulemaking, please refer to:
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