On October 15, the Consumer Financial Protection Bureau released a bulletin and interim final rule concerning mortgage servicing regulations that take effect in January 2014. The bulletin and interim final rule seek to clarify outstanding issues related to servicing.
Among the highlights of the interim final rule, the CFPB seeks to address the intersection of the new servicing rules and Dodd-Frank requirements and the FDCPA. Specifically addressed is whether servicers are required to continue sending certain communications to delinquent borrowers once the borrower has made a general request for servicers to stop communications under the FDCPA.
The CFPB seeks to clarify which notices servicers must continue to send if a delinquent borrower has exercised their rights under the FDCPA to request a cease in communications from the servicer. The CFPB exempts servicers from providing ongoing notices of interest rate changes or certain early intervention notices to delinquent borrowers. However, the CFPB believes the following notices are still required after a general request to stop communication: requests for loss mitigation, information requests, error resolution, force-placed insurance, initial interest rate adjustment of adjustable-rate mortgages, and periodic statements. The CFPB does indicate that a borrower can opt out of these notifications by sending a specific request. The interim final rule states that CFPB will “engage in further analysis of how these servicing requirements intersect with bankruptcy law” and how to ensure these communications will not confuse delinquent borrowers.
The CFPB also released a bulletin which offers guidance to servicers on the implementation of the new servicing rules. The bulletin addresses, among others: (1) examples of policies and procedures for ensuring prompt identification and communication with successors in interest after a borrower dies; and (2) examples of how a servicer can comply with the Early Intervention Rule, as well as the earlier discussed intersection of the FDCPA and CFPB and Dodd-Frank requirements.
As part of the new servicing rules, the CFPB requires servicers to conduct home retention efforts after a borrower dies. Under the rules, servicers must have policies and procedures in place to ensure that successors in interest are identified and notified shortly after the death of a borrower. The bulletin gives examples of such policies and procedures and suggests that servicers “should consider whether best practices” include evaluating whether to postpone or withdraw pending foreclosure proceedings to allow a successor in interest the opportunity to establish ownership rights and pursue assumption, or to allow a successor in interest to pursue loss mitigation options.
The CFPB also offers guidance on compliance with the Early Intervention Rule and what can constitute making a good faith effort to establish live contact with a borrower. Once the rule takes effect, servicers will be required to make a good faith effort to establish live contact with a borrower for each billing cycle for which a borrower is delinquent by at least 36 days. The bulletin provides several examples of communications that are considered “reasonable steps under the circumstances to establish live contact.”