Aug. 13, 2012 – The Consumer Financial Protection Bureau is taking comments until Oct. 9 on proposed rules that would revise mortgage servicing requirements under the Truth in Lending Act and Real Estate Settlement Procedures Act.
The changes, required under the Dodd-Frank Act, closely track provisions the CFPB floated this April. According to details from the CFPB, they include three significant revisions under TILA. These are:
- a requirement for servicers to send homeowners detailed periodic statements on mortgages;
- a requirement to send advance notice of rate increases earlier, between 60-120 days before the new rate’s effective date and 210-240 days before the first adjustment (now, the window is 25-100 days before);
- changes to payment crediting when only a partial payment is received.
The proposal would exempt small servicers from the periodic statement requirement. The exemption would apply to servicers handling fewer than 1,000 loans, and only loans they originated.
In other provisions, the CFPB is proposing several rule changes under RESPA, among them required notice to consumers of force-placed insurance at least 45 days before charging the consumer for the insurance; and stricter requirements to address errors and respond to borrowers’ requests for information.
Under changes related to foreclosure and loss mitigation, servicers would be required to:
- contact borrowers within 30 days of a late payment and again within 40 days of the late payment;
- ensure continuity of contact to ensure the borrower does not have to repeatedly answer the same questions or resubmit the same information;
- implement information management policies and procedures designed to ensure it does not lose information or documents received regarding a troubled loan
- correct errors asserted by mortgage loan borrowers;
- provide information requested by mortgage loan borrowers;
- ensure that a reasonable basis exists to obtain force-placed insurance;
- provide information about mortgage loss mitigation options to delinquent borrowers; and,
- to evaluate borrowers’ applications for available loss mitigation options.
NAFCU and four of its member credit unions participated in the CFPB’s Small Business Review Panel meeting this April on the servicing rules. The association is preparing a Regulatory Alert seeking members’ input to the association’s official comment letter.
Additional information and the CFPB documents are available in Friday's NAFCU Compliance Blog post.
(This story originally posted 9:41 a.m. Eastern on Aug. 10)