cfpb compliance: how the new !! rules intersect with other ...€¦ · adamj.!wilde!...

ADAM J. WILDE CODILIS & ASSOCIATES, P.C.

CFPB Compliance: How The New Rules Intersect with Other Laws

Panelists

•  Adam J. Wilde: Supervising A@orney, Codilis & Associates •  Michelle Mierzwa: NaIonal Managing A@orney—Non-‐

Judicial Foreclosure, Butler & Hosch •  Chandra Tafolla: Vice President, Wells Fargo •  Andrea Tromberg: Managing Partner, Gladstone Law

Group •  Adam Codilis: A@orney and Director of Client RelaIons,

Codilis & Associates •  Laurie Maggiano: CFPB, Servicing and Secondary Markets

Program Manager

Ques,ons for the Panelists?

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Introduc,on

•  July 21, 2010 Dodd-‐Frank Act was signed into law, establishing the Bureau of Consumer Financial ProtecIon (“CFPB”). – Act consolidated the rulemaking and enforcement authority for a dozen federal consumer financial laws including TILA, RESPA, and the FDCPA.

– Act granted the authority to create the Bureau of Consumer Financial ProtecIon (“CFPB”)

Introduc,on

“The [CFPB] is a 21st Century agency that helps consumer finance markets work by making rules more effecIve, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”

Introduc,on

•  §1061 of the Dodd Frank Act transferred to the CFPB consumer financial protecIon funcIons.

•  CFPB has been busy. – Since January of 2013, it issued myriad new rules

ANSWERS

•  BUT HOW DO WE INTERPRET? –  Like any laws, these new laws leave some ambiguiIes, uncertainty, and are in need of further interpretaIon.

•  Purpose of this presentaIon: – Our panelists have reviewed the new laws. – We have spo@ed the issues. – The goal of this presentaIon is to make our audience aware of the ambiguiIes and help provide clarity and best pracIces for compliance.

REGULATION Z: TILA 12 CFR 1026

POLLING QUESTION:

• Which TILA Change has impacted your business the most?

• 1) 12 CFR 1026.36 Payment Crediting?

• 2) 12 CFR 1026.41: The New Periodic Billing Statements

1026.36 Prompt Payment Credi,ng and Payoff Statements

•  REG Z: Prompt Payment CrediIng and Payoff Statements (12 CFR 1026.36)

•  1026.36(c)(1)(i)—PERIODIC PAYMENTS – “The Perpetual Default”—borrower remains delinquent but less than 120-‐days. •  The ParIal Payment MOVING TARGET.

– Post-‐Referral Payments: How should a servicer address post-‐foreclosure payments that are insufficient to reinstate? What is a periodic payment post-‐acceleraIon?

§1026.41Periodic Billing Statements for Residen,al Mortgage Loans

•  New Periodic Billing Statement codifies what needs to be included. – Must be sent every billing cycle, regardless of default.

– Must also include informa,on regarding delinquency •  Delinquency informa,on

§1026.41 Periodic Billing Statements •  (d) Content and layout of the periodic statement. The periodic statement

required by this secIon shall include (CONTD): –  (8) Delinquency informaIon. If the consumer is more than 45 days delinquent,

the following items, grouped together in close proximity to each other and located on the first page of the statement or, alternaIvely, on a separate page enclosed with the periodic statement or in a separate le@er: •  (i) The date on which the consumer became delinquent; •  (ii) A noIficaIon of possible risks, such as foreclosure, and expenses, that may be

incurred if the delinquency is not cured; •  (iii) An account history showing, for the previous six months or the period since the last

Ime the account was current, whichever is shorter, the amount remaining past due from each billing cycle or, if any such payment was fully paid, the date on which it was credited as fully paid;

•  (iv) A noIce indicaIng any loss miIgaIon program to which the consumer has agreed, if applicable;

•  (v) A noIce of whether the servicer has made the first noIce or filing required by applicable law for any judicial or non-‐judicial foreclosure process, if applicable;

•  (vi) The total payment amount needed to bring the account current; and •  (vii) A reference to the homeownership counselor informaIon disclosed pursuant to

paragraph (d)(7)(v) of this secIon.

§1026.41 H-‐30(a-‐c)

§1026.41 Periodic Billing Statements

•  IntersecIon with Foreclosure Law. –  Total Amount Due: What if the borrower pays the Total Amount Due?

•  No disclaimer? Has servicer waived any fees? •  Are those fees non-‐recoverable? •  Best pracIces

•  EXEMPTIONS •  BEST PRACTICES

–  Create your own form. –  Insert a disclaimer in your own form: –  “***THE TOTAL AMOUNT DUE IS NOT A PAYOFF OR REINSTATEMENT.

AS YOUR LOAN IS IN DEFAULT, ADDITIONAL CHARGES MAY APPLY TO CURE THE DELINQUENCY. FOR AN UP-‐TO-‐DATE REINSTATEMENT AMOUNT PLEASE CONTACT US AT 1.888.555.555.

CFPB MORTGAGE SERVICING RULES

POLLING QUESTION Which new Mortgage Servicing Rule has impacted your

business the most? •  1) 12 CFR 1024.35/36 Notices of Error/Requests for

Information? •  2) 12 CFR 1024.38 General Servicing Policies and

Procedures? •  3) 12 CFR 1024.39/40 Early Intervention/Single Point

of Contact? •  4) 12 CFR 1024.41 Loss Mitigation Procedures?

§ 1024.35/36 No,ces of Error Requests for Informa,on

¡ NoIce of Error and Error ResoluIon propose and set forth strict Imelines for servicers to comply with responding to such requests.

¡ Creates private right of acIon for violaIon ¡ 12 CFR 1024.35(c) and 1024.36(b): The Designated address. ¡ Submissions to the law firms?

¡ Law firm fits the definiIon of a servicer provider? ¡ Law firm best pracIces when it receives a noIce or error/request for informaIon?


¡ DISCOVERY ISSUES: ¡ Many firms are reporIng borrowers and their a@orneys are using the requests for informaIon as a means to conduct discovery issues ¡ What are the best pracIces for dealing with this?

¡  FDCPA Issues: Servicers are not exempt from compliance: What if a cease and desist le@er is filed?

¡  Requirements not applicable. § (i) DuplicaIve noIce of error. § (ii) Overbroad noIce of error. § (iii) UnImely noIce of error. A noIce of error is delivered to the servicer more than one year aver: ¡ (A) Servicing for the mortgage loan that is the subject of the asserted error was transferred from the servicer receiving the noIce of error to a transferee servicer; or

¡ (B) The mortgage loan is discharged.


¡  Requirements not applicable. •  (2) NoIce to borrower. If a servicer determines that, pursuant to this paragraph (f), the servicer is not required to comply with the requirements of paragraphs (c) and (d) of this secIon, the servicer shall no,fy the borrower of its determina,on in wri,ng not later than five days (excluding legal public holidays, Saturdays, and Sundays) aver making such determinaIon. The noIce to the borrower shall set forth the basis under paragraph (f)(1) of this secIon upon which the servicer has made such determinaIon.


1024.41: Loss Mi,ga,on Procedures

¡  Loss MiIgaIon Procedures may be the largest change to servicing. ¡  It creates a private right of acIon for borrowers 12 CFR 1024.41(a)

¡  Does not have a designated address for submissions. ¡  It directly stays servicers abiliIes to move foreclosure acIons unIl certain reviews take place.


¡  Determining Complete Loss MiIgaIon ApplicaIon ¡  A servicer has discreIon to define this term.

¡ What are the best pracIces for doing so?

¡ Acknowledgment: A servicer has only 5 days to acknowledge a loss miIgaIon applicaIon as complete or incomplete.

¡ No designated address.


¡  120-‐day RULE. ¡  (f) Prohibi,on on foreclosure referral. ¡  (1) Pre-‐foreclosure review period. A servicer shall not make the first no,ce or filing required by applicable law for any judicial or non-‐judicial foreclosure process unless: §  (i) A borrower's mortgage loan obligaIon is more than 120 days delinquent;

§  (ii) The foreclosure is based on a borrower's violaIon of a due-‐on-‐sale clause; or

§  (iii) The servicer is joining the foreclosure acIon of a subordinate lienholder.

¡  BEST PRACTICES: §  (2) The procedures set forth in §§ 1024.39 through 1024.41 of this subpart only apply to a mortgage loan that is secured by a property that is a borrower's principal residence.


¡  (g) Prohibi,on on foreclosure sale. If a borrower submits a complete loss mi0ga0on applica0on aver a servicer has made the first noIce or filing required by applicable law for any judicial or non-‐judicial foreclosure process but more than 37 days before a foreclosure sale, a servicer shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, unless: §  (1) Denial for all opIons §  (2) rejecIon of all opIons §  (3) fails to perform under offer.

§ NOT MOVE FOR FORECLOSURE JUDGMENT OR SALE? § What steps may a servicer sIll take in the foreclosure acIon? § What about a MoIon for Summary Judgment that does not result in a judgment of foreclosure or order of sale?


INTERSECTION WITH OTHER LAWS? •  MediaIon and Privilege? – What if a borrower submits documents for review for purposes of mediaIon?

–  If they later a@empt to raise a cause of acIon for violaIon of 1024.41, does privilege apply?

•  What are the best pracIces for reviewing loss miIgaIon documents for purposes of mediaIon? –  If submi@ed to counsel, is counsel automaIcally the servicer’s agent?

1024.41: Loss Mi,ga,on Procedures—Greater Protec,ons

•  INTERSECTION WITH OTHER LAWS? – Making Home Affordable Program: Offers greater protecIons: •  Change in circumstances, re-‐review? • What are the best pracIces for compliance?

–  Illinois Law: •  SCR 114 •  735 ILCS 5/15-‐1508(d-‐5)

– CA/NV Homeowner Bill of Rights. – Florida Loss MiIgaIon Rules


•  The laws do contain some uncertainty. •  The CFPB has provided a lot of guidance and

interpretaIon of the new rules. –  We all hope it will conInue to do so and provide

the needed clarity.

•  ….Well that depends…. –  Best Prac0ces depends


•  QUESTIONS??????

Ques,ons for the Panelists?

You can submit them by:

•  VisiIng this session’s quesIon link: h@ps://www.polleverywhere.com/free_text_polls/u7rouhVD0UYDi2i/web

•  TexIng 589500 and your quesIon to: 22333

•  VisiIng our Poll site for access to all of our Session polls/quesIons: h@ps://www.polleverywhere.com/alfn

•  Ask quesIons or make comments verbally by using the microphones provided in the session room

cfpb compliance: how the new !! rules intersect with other ...€¦ · adamj.!wilde!...

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