Debt collectors and third party loan servicers in Massachusetts should be on the alert for some new amendments recently enacted by the Massachusetts Division of Banks. On October 11, 2013, the Division enacted some changes to regulation to the regulations that control how licensed debt collectors and third party loan servicers conduct business in the Commonwealth of Massachusetts. Among others, we now present six changes to look out for.
Amendments specific to debt collectors
Expansion of the definition of “debt collector”: The definition of who qualifies as a debt collector in the regulations is no longer limited to those who regularly collect or are in the business of debt collection. The amendments expand the definition of debt collector to include “any person who buys or acquires debt that is in default at the time of purchase or acquisition and who seeks to collect such debt directly.” This change implements written guidance previously in place through interpretive letters issued by the Division of Banks.
Changes to operational requirements: Pursuant to the regulations, debt collectors who conduct business as a third party loan servicer now must comply with all pertinent laws and regulations governing third party loan servicers when they act in that capacity, including updated provisions relating to unfair servicing practices and mortgage loan servicing practices generally.
Restrictions on text messaging: The regulation has been updated to disallow debt collectors from collecting debt via persistent text messaging. In addition, actions resulting in expense to a consumer due to text messaging, telephone calls, download fees, data usage, or similar charges are prohibited.
Amendments specific to third party loan servicers
Unfair or unconscionable means in servicing a loan: The regulation already lists out several practices relating to unfair or unconscionable loan servicing. The amendments add several new prohibited activities, such as misrepresenting to the borrower the amount of fees or payment due on a loan.
New requirements specific to servicing mortgage loans: The amendments also create new guidelines for targeting unfair or unconscionable means specifically geared towards the servicing of mortgage loans. For example, it is now considered unfair or unconscionable if a loan servicer fails to provide loan payoff information to a consumer if the consumer requests it.
Additional requirements for foreclosure proceedings: Third party loan servicers authorized to act on behalf of a mortgagee are subject to additional requirements under the amendments. For example, the amendments require a third party loan servicer to make sure he or she is in compliance with all state and federal laws governing the rights of tenants living in foreclosed residential properties.