At the beginning of August 2016, the Consumer Financial Protection Bureau (the CFPB) released a sprawling 900-page document explaining proposed changes to mortgage servicing rules
The rules have undergone many changes since they were originally created in 2013, but the most recent amendments to Regulations Z and X became official all the way back in November 2014. The 2016 proposal intends to finalize, clarify, revise, and amend provisions related to several topics:
- Force-placed insurance notices, procedures, and policies
- Regulation X early intervention and loss mitigation demands
- Regulation Z requirements regarding prompt crediting and periodic statements
The final rules generally go into effect one year after the publication date in the Federal Register. For some specific amendments pertaining to successors in interest and bankruptcy periodic statements, the effective date is expected to be 18 months from the date of publication.
The proposed changes published in August include many important clarifications and technical corrections regarding Regulations X and Z. Here’s a brief list of the key topics that may change:
1. Successors in interest
2. Definition of delinquency. The Final Rule addresses the general definition of “delinquency,” which applies to Regulation X servicing provisions and Regulation Z statements regarding periodic statements.
3. Requests for information. Proposed changes would affect the way servicers respond to ownership information requests for loans in trust (when Freddie Mac or Fannie Mae is the owner of the loan or a trustee of the trust in which the loan is secured.)
4. Force-placed insurance. Proposed changes cover model forms and disclosures for force-placed insurance.
5. Early intervention. The CFPB’s 2016 rule updates clarify early intervention live contact obligations. Changes affect servicers developing or making good faith efforts to develop live contact with delinquent borrowers.
6. Loss mitigation. Several changes are proposed for loss mitigation requirements. We recommend further reading on this issue, as many of the amendments could affect servicers.
7. Prompt payment crediting. Servicers need to be aware of proposed amendments to rules regarding how they can treat periodic payments submitted by consumers performing within permanent loan modifications or temporary loss mitigation programs.
8. Periodic statements. The Final Rule clarifies numerous requirements regarding periodic statements. Included are changes to the requirements for consumers in bankruptcy.
9. Small servicer. The CFPB specified new terms to the small servicer determination.
10. FDCPA safe harbor. Last but not least, the Bureau addressed the terms of proper compliance when a person is a confirmed (or potential) debtor, successor in interest, or sender of a cease communication request.
Want to know how these rules will affect your company? Want to partner with a trusted Mid-Atlantic Title Insurance company? Look no further!
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