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CFPB Clarifies Rules for Borrower Contact

by devteam October 16th, 2013 | Share

The Consumer Financial ProtectionrnBureau (CFPB) released a bulletin today in response to requests for furtherrnclarification on three servicing issues.  Two of the clarifications are as follows:</p<ul class="unIndentedList"

  • ThernJanuary servicing rules require that policies and procedures be in place thatrnensure that servicers, upon the death of a borrower, contact the deceased’s familyrnmembers, heirs or other parties with a legal interest in the home. Today’s bulletin provides examples of thesernpolicies and procedures to promote retention of the home such as procedures forrncontinued payments, possible mortgage assumption, or loss mitigation measures. </li<liArnsecond clarification concerns a requirementrnthe servicer attempt to contact the borrower when he misses a payment. CFPB says such contact, intended to providerninformation to get the borrower back on track, can occur jointly with that madernfor another purpose such as a collection call.rnAlso, the method of attemptedrncontact may vary depending on how long a borrower is delinquent or whether thernborrower has responded to earlier servicer attempts to communicate. </li</ul

    The third and most complexrnclarification involves the interplay between the servicing rules, thernbankruptcy code, and the Fair Debt Collection Practices Act (FDCPA) where bothrnof the latter provide significant protections to borrowers, allowing them tornrestrict certain types of communications about their debt.  </p

    CFPB says that even if delinquent butrnnon-bankrupt borrowers have invoked these protections and have instructedrnservicers to stop communicating with them certain notices and communicationsrnmandated by the CFPB servicing rules and the Dodd-Frank Wall Street Reform andrnConsumer Protection Act are still required.</p

    These include responses to borrower requestsrnfor information, loss mitigation, error resolution, force-placed insurance, initialrninterest rate adjustment of adjustable-rate mortgages, and periodic statements.rn Servicers will not be required tornprovide certain early intervention contacts or ongoing notices of interest raternadjustments to borrowers who have requested no communication. </p

    Where borrowers have filed forrnbankruptcy, servicers are exempted at this time from CFPB requirements to providernperiodic account statements and certain early intervention contacts.  CFPB says it will further assess howrnbankruptcy protections intersect with these servicing requirements and how tornensure that the servicing communications do not confuse consumers about thernstatus of their loans.</p

    “As servicing implementation entersrnits final phases, we heard from many sources that it was important tornaddress these remaining issues to ensure a smooth transition and providerncertainty to the market,” said CFPBrnDirector Richard Cordray. “When mortgage servicers better understand the rulesrnthey have to follow, that is better for consumers.”</p

    The Bureau is also releasing anrninterim final rule which, among other issues, clarifies a requirement thatrnborrowers receive housing counseling before taking out a high-cost mortgage.  The interim rule will be available laternTuesday afternoon.

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  • About the Author

    devteam

    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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