On Aug. 4, 2016, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending some of the January 2014 mortgage servicing rules found in Regulation Z (Truth in Lending Act) and Regulation X (Real Estate Settlement Procedures Act). The rule revisions make a variety of changes, including those affecting rights of successors in interest. The 2014 rule requires credit unions that service mortgages to maintain policies and procedures that are designed to "promptly identify and facilitate communication with the successor in interest of [a] deceased borrower with respect to the property secured by the deceased borrower's mortgage loan." 12 C.F.R. § 1024.38(b)(1)(vi). The recently finalized changes will significantly expand the protections afforded to successors in interest.
First, the rule's scope is expanded with amendments to the definitions of "borrower" in Regulation X and "consumer" in Regulation Z to include "confirmed successors in interest." See Preamble to 2016 Mortgage Servicing Rules, pp. 782, 854. As a result, the mortgage servicing provisions contained in Regulation X, such as those relating to error resolution, early intervention and loss mitigation, as well as the rules for escrow accounts, will apply to successors in interest who have been verified by the servicer. Credit unions will also be required to provide confirmed successors in interest with rate adjustment notices for adjustable- rate mortgages and periodic statements, and to promptly credit payments according to the requirements in Section 1026.36 of Regulation Z.
From the November-December 2016 issue of The Federal Credit Union magazine.