CFPB Publishes Small Entity Compliance Guide for New Servicing Rules
November 30, 2016 the Consumer Financial Protection Bureau (CFPB) published a Small Entity Compliance Guide on the final rules that were announced in August 2016, known as the 2016 Mortgage Servicing Rule. Outlined below are highlights of the new rule:
Small servicer: The small servicer exemption generally applies to servicers who service 5,000 or fewer mortgage loans for all of which the servicer is the creditor or assignee. The 2016 Mortgage Servicing Rule excludes certain seller-financed transactions and mortgage loans voluntarily serviced for a non-affiliate, even if the non-affiliate is not a creditor or assignee, from being counted toward the 5,000 loan limit
Successors in interest: The 2016 Mortgage Servicing Rule adds definitions of “successor in interest” to subpart C of Regulation X and to Regulation Z. In addition, it includes provisions related to how a servicer confirms a successor interest’s identity and ownership interest in a property. It also generally provides that the mortgage servicing rules apply to successors in interest once a servicer confirms the successor in interest’s status.
Periodic statements: The 2016 Mortgage Servicing Rule clarifies certain periodic statement disclosure requirements relating to mortgage loans and requires servicers to provide certain borrowers in bankruptcy a modified periodic statement or coupon book. In addition, in certain circumstances, servicers generally are exempt from the periodic statement requirement for charged-off mortgage loans.
Force-placed insurance: The 2016 Mortgage Servicing Rule amends the force-placed insurance disclosures and model forms to account for instances when the borrower has insufficient coverage on the property and it gives servicers the option to omit a borrower’s mortgage loan account number on certain required notices.
Early intervention: The 2016 Mortgage Servicing Rule clarifies the obligations for servicers to establish or make good faith efforts to establish live contact with delinquent borrowers. In addition, the rule revises the exemption from early intervention for borrowers who are in bankruptcy or who have invoked cease communication protection under the Fair Debt Collection Practices Act (FDCPA).
The definition of delinquency: The 2016 Mortgage Servicing Rule adopts a general definition of delinquency that applies to all servicing provisions of Regulation X and periodic statements for mortgage loans in Regulation Z.
Loss mitigation: The 2016 Mortgage Servicing Rule amends and modifies several sections of the loss mitigation rule.
The CFPB Small Entity Compliance Guide is available on the CFPB website.
Bankers Advisory Reference Guide for Financial Institutions
Bankers Advisory, a CliftonLarsonAllen LLP Division, has recently prepared a best practices guidebook to the 2016 Mortgage Servicing Rules that is clearly formatted for easy reference. Topics include final rule summary, small servicers, delinquencies, foreclosures, safe harbors and CFPB Examinations. Please contact anna@bankersadvisory.com to inquire if your institution is on our complimentary shipping list. To view the table and contents and sample pages, click here.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
Comments are closed.