CFPB issues mortgage servicing rule clarifications
Oct. 16, 2013 – CFPB issued a final interim rule and bulletin Tuesday to clarify areas of concern in a mortgage servicing rule that takes effect in January – including communication with the family of a borrower who has died, communication with delinquent borrowers, and the Fair Debt collection Practices Act.
“Even before the financial crisis, the mortgage servicing industry experienced problems with bad practices and sloppy recordkeeping,” the CFPB said. “Today, many borrowers continue to experience serious problems seeking loan modifications or other alternatives to avoid foreclosure. In January 2013, the CFPB issued rules to establish new, strong protections for struggling homeowners, including those facing foreclosure. The rules protect mortgage borrowers from costly surprises and runarounds by their servicers. “
CFPB Bulletin 2013-12 includes examples of servicer policies regarding how to evaluate a deceased borrower’s heir to take over a mortgage; the rules going into effect January require servicers to have policies in place to help find family members if a borrower dies.
The rules also address communication with delinquent borrowers; the bulletin explains that servicers required to attempt contact with delinquent borrowers can do so when contacting the borrowers for other reasons, such as a collection call. The bureau bulletin also looks at how the servicing rules work with the FDCPA and bankruptcy law, including which notices to delinquent borrowers required by the CFPB supersede requirements under the FDCPA to cease communication.
NAFCU's mortgage rules page