cfpb 2016 mortgage servicing rule changesnov 30, 2016 · promulgated by cfpb on november 20, 2014....
TRANSCRIPT
NAFCU Webinar
November 30, 2016
Presented by
John H. DeLoachPost Office Box 4128 · Tallahassee, Florida 32315
(800) 377-3325
www.williamsgautier.com
CFPB 2016 Mortgage
Servicing Rule Changes
Disclaimer – No Legal Advice
The information in this presentation is intended for
general informational purposes only and does not
constitute legal advice. DO NOT act upon this
information without first consulting directly with your
attorney regarding the specific application of the laws
and regulations referenced herein to your specific
circumstances. No attorney-client relationship is formed
as a result of this presentation.
Mortgage Servicing Rule Changes
Promulgated by CFPB on November 20, 2014.
Final rule completed on August 4, 2016, and published in
Federal Register on October 19, 2016.
Known as “2016 Mortgage Servicing Rule.”
Most provisions effective on October 19, 2017.
Successor-in-interest provisions effective on April 19,
2018.
Mortgage Servicing Rule Changes
10 major areas of changes:
Successors in interest.
Definition of delinquency.
Requests for information.
Force-placed insurance.
Early intervention.
Loss mitigation.
Prompt payment crediting.
Periodic statements.
Small servicers.
FDCPA Interpretive Rule.
Question #1
John Brown, the sole borrower on his home mortgage
loan, dies. John’s son, Sam, continues to make all loan
payments (including escrow). What are our options?
A. Declare the loan in default and foreclose.
B. Tell Sam he must assume the loan or we will
foreclose.
C. Do nothing as long as Sam continues to
make all payments.
Successors in Interest
New definition of “successor in interest” includes any
person who receives an ownership interest in property
securing a mortgage loan from an existing
borrower/owner via transfer:
By devise, descent or law resulting from borrower’s
death.
To a relative resulting from borrower’s death.
To borrower’s spouse or children.
To borrower’s spouse via divorce or separation.
To an inter vivos trust with borrower as a beneficiary
and without a transfer of occupancy rights.
Successors in Interest
Servicers must adopt policies and procedures to confirm
the identity and ownership interests of successors and
promptly communicate such confirmation to successors.
Confirmed successors are considered borrowers under
all Mortgage Servicing Rules (including information
requests with limits on certain personal information on
any other borrower).
Don’t forget the Garn-St. Germain Act.
Definition of Delinquency
“Delinquency” begins on the date a payment sufficient to
cover principal, interest and (as applicable) escrow
becomes due and unpaid (regardless of any late fee
grace period).
Important for calculation of 120-day foreclosure waiting
period.
New definition matches Fannie Mae/Freddie Mac note
standards.
Definition of Delinquency
What about FDCPA “default” vs. “delinquency?
What about non-monetary defaults under mortgages?
Requests for Information
Requests for information regarding owner/assignee of
mortgage loans if Fannie Mae/Freddie Mac owns loan or
acts as trustee of securitization trust.
If no express request for the name or number of the
trust/pool, servicer can comply by providing
Fannie/Freddie name and contact information.
If express request for the name or number of the
trust/pool, servicer must provide trust name, trustee’s
name and contact information.
Force-Placed Insurance
New model form for initial notice to borrowers with
insufficient (rather than expired or expiring) hazard
insurance coverage.
New model form for reminder notice to borrowers with
insufficient (rather than expired or expiring) hazard
insurance coverage.
Servicers may include mortgage loan account number
on new notices.
Question #2
How many mortgage loans does your Credit Union
service?
A. None.
B. 5,000 or less.
C. More than 5,000.
Early Intervention
Only one written notice required in any given 180-day
period.
If borrower is 45 days+ delinquent at end of any 180-day
period, servicer must provide notice within 180 days
following date of prior notice.
If borrower is less than 45 days delinquent at end of any
180-day period, servicer must provide notice within 45
days following the payment due date.
Early Intervention
Live contact exemption if:
Any borrower is in bankruptcy; or
Servicer is FDCPA debt collector, and any borrower
invokes FDCPA cease communication protection.
If either exemption applies, servicer exempt from written
notice requirements if no available loss mitigation option.
If any available loss mitigation option, no exemption from
written notice requirements unless both exemptions
apply.
Early Intervention
Early intervention requirements resume once bankruptcy
case is closed/dismissed or borrower reaffirms personal
liability for loan.
If “ride through” bankrupt borrower discharges personal
liability, early intervention requirements resume if
borrower makes any partial or periodic payment after
commencement of bankruptcy.
Loss Mitigation
Requirements apply throughout the life of loan for
borrower who cures delinquency at any time between
prior application and subsequent application..
Junior lien servicer can join a foreclosure action by
senior or junior lienholder even if borrower is not 120
days’ delinquent on servicer’s loan.
Servicer has reasonable flexibility in setting a deadline
for returning documents for a loss mitigation application.
Loss Mitigation
Detailed description of steps required to delay or dismiss
foreclosure action to avoid sale upon receipt of complete
loss mitigation application more than 37 days before
foreclosure sale.
Notification to borrower required within 5 business days
following servicer’s receipt of a complete loss mitigation
application with specific disclosures regarding expected
time of review (30 days), borrower’s rights and
protections and possible need for additional information.
Loss Mitigation
Servicer required to exercise reasonable diligence in
obtaining all required information (including third party
information). Denial of application generally not
available based on servicer’s failure to receive third party
information.
Notice of lacking information must be sent to borrower
within 30 days after receipt of complete application.
Servicer permitted to offer short-term repayment plan
based on incomplete application (up to 6 months).
Notice following offer must provide specific plan terms.
Loss Mitigation
Servicer can stop collecting information from borrower
for particular loss mitigation option if servicer confirms
that borrower is ineligible for option.
Servicer may not stop collection information for any
option based solely on borrower’s stated preference.
Servicer may only stop collecting information based on
borrower’s preference in conjunction with other
information set forth in loan owner’s requirements.
Loss Mitigation
Transfer of servicing does not affect loss mitigation rights
and foreclosure protections. Transferee servicer subject
to same timelines applied to transferor servicer except:
Additional 10 business days for acknowledgment
notice.
30 days to evaluate application if application was
complete before transfer.
Prompt Payment Crediting
Periodic payments under temporary loss mitigation
programs must be credited according to loan agreement
and can be applied as partial payments.
Periodic payments under permanent loan modifications
made in accordance with the modification must be
credited under terms of permanent loan agreement and
cannot be applied as partial payments.
Periodic Statements
Amended periodic statement disclosures for closed-end
mortgage loans that have been accelerated, are in
temporary loss mitigation programs or have been
permanently modified. Slightly different disclosure
changes for each scenario (particularly “amount due”
disclosures).
Periodic statements (or coupon books as applicable)
generally required for bankrupt borrowers subject to
specific exclusions related to cease communication
requests, property surrender, lien avoidance and other
circumstances.
Periodic Statements
No periodic statements required for charged-off loans if
servicer will not charge additional fees or interest and
provides final periodic statement with additional
disclosures related to effects of charge-off.
Bankruptcy-related periodic statement changes effective
April 19, 2018.
Small Servicer
Definition of “small servicer” revised to exclude certain
seller-financed transactions from the “more than 5,000”
count.
More importantly, the proposed rule does not expand the
coverage of the Mortgage Servicing Rules as applied to
small servicers. All existing small servicer exemptions
remain in place.
FDCPA Interpretive Rule
Safe harbor from FDCPA liability for services that take
following actions (as long as such actions otherwise
comply with Mortgage Servicing Rule):
Communications about a loan with a confirmed
successor in interest.
Written early intervention notice to a borrower who
has invoked FDCPA cease communication protection.
Response to borrower-initiated communication
concerning loss mitigation after borrower has invoked
FDCPA cease communication protection.
Question #3
What is the statute of limitations for a TILA/RESPA claim
for a mortgage loan?
A. 1 year.
B. 3 years.
C. There is no statute of limitations for a TILA/RESPA
claim.
What’s Next?
Implementation Plan.
Review of Final Rule.
Policies.
Procedures.
Vendor Requirements.
Forms and Mapping.
Training.
Quality Control/Audit Plan.
What about the Trump administration’s plans?
Question #4
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THE END