Compliance Blog

Blog Home
Jul 15, 2009
Categories: Consumer Lending

Notification of Sale or Transfer of Mortgage Loans

Posted by Steve Van Beek

An active Congress can make it very difficult to track new requirements.  For example, Section 404 of the Helping Families Save Their Homes Act of 2009 (S.896) contains a notification requirement upon the sale or transfer of a mortgage loan.  The title of Section 404 - "Notification of Sale or Transfer of Mortgage Loans" can be a little confusing as the responsibility is on the new creditor to notify the mortgagee.  Here is the language from Section 404:

"SEC. 404. NOTIFICATION OF SALE OR TRANSFER OF MORTGAGE LOANS. 
(a) IN GENERAL.—Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is amended by adding at the end the following: 
‘‘(g) NOTICE OF NEW CREDITOR.— 
‘‘(1) IN GENERAL.—In addition to other disclosures required by this title, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including— 
‘‘(A) the identity, address, telephone number of the new creditor; 
‘‘(B) the date of transfer; 
‘‘(C) how to reach an agent or party having authority to act on behalf of the new creditor;
‘‘(D) the location of the place where transfer of ownership of the debt is recorded; and 
‘‘(E) any other relevant information regarding the new creditor. 
‘‘(2) DEFINITION.—As used in this subsection, the term ‘mortgage loan’ means any consumer credit transaction that is secured by the principal dwelling of a consumer.’’. 
(b) PRIVATE RIGHT OF ACTION.—Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended by inserting ‘‘subsection (f) or (g) of section 131,’’ after ‘‘section 125,’’."  (emphasis added).

Credit unions who are selling or transferring loans would not have the notification requirement.  However, if your credit union participates in a CUSO or is the continuing credit union in a merger - this section is one to have on your radar going forward.

***

We will jump back into the Credit CARD Act tomorrow - on to Section 301...

Categories