CFBP Mortgage Servicing Proposal Concerns
Credit Union National Association (CUNA) staff continue to draft comment letters to the Consumer Financial Protection Bureau (CFPB) concerning the proposed mortgage servicing rules that will amend Regulation Z and Regulation X. Below are a few items contained within the proposals that may be of heightened concern for credit unions:
- Closed-end mortgage loan periodic statements would have to be delivered within a reasonably prompt time after the close of the grace period of the previous billing cycle. The proposal provides that 4 days after the close of any grace period would be considered to meet this requirement. Additionally, for the first payment on a mortgage loan, the first periodic statement must be sent no later than 10 days before the first payment on the loan is due;
- The CFPB has proposed a small servicer exemption with respect to the periodic statement requirement for those servicers who service 1,000 or fewer mortgage loans and also only service mortgage loans that are owned or originated by that servicer. Additionally, fixed-rate loans for which the servicer provides a coupon book containing substantially similar information as found in the periodic statement would also be exempted. However, if this coupon book exception is used by a servicer, the delinquency information contained on the periodic statement would still have to be sent to the consumer in writing for each billing cycle for which the consumer is more than 45 days delinquent at the beginning of the billing cycle;
- Borrowers would have the ability to deliver notices of error and information requests to credit unions either orally or in writing, and new specific (and shorter) timelines are being proposed in which credit unions would have to investigate, compile information, and respond to such requests. Importantly, servicers may not furnish adverse information regarding any payment that is the subject of a notice of error to any consumer reporting agency for 60 days after receipt of a notice of error;
- Servicers would also have to inform borrowers of their right to request documents relied upon by the servicer in reaching determinations involving notices of errors, and must provide such documents within 15 days of a receipt of a borrower’s request for such documents;
- At least 20 new notices would be created and required under the proposed rules, which credit unions would have to build, develop policies and procedures for, and train staff on. Additional timing restrictions on the delivery and responses relating to such notices would necessitate tracking mechanisms within credit unions to comply with the proposed rules;
Servicers would be required to provide a borrower, upon request, a mortgage servicing file, which must include the following:
- A schedule of all payments credited or debited to the mortgage loan account;
- A copy of the borrower’s mortgage note;
- A copy of the borrower’s deed of trust;
- Any collection notes created by servicer personnel reflecting communications with borrower about their mortgage loan account;
- A report of any data fields relating to a borrower’s mortgage loan account created by a servicer’s electronic systems in connection with collection practices, including records of automatically or manually dialed telephonic communications; and
- Copies of any information or documents provided by a borrower to a servicer as part of the error resolution and loss mitigation sections of the proposed rules.
This list of potential concerns is intended to highlight a few of the major requirements under the proposal. As CUNA continues to draft its comment letter to the CFPB, they urge credit unions to submit their own comments to the CFPB by October 9, as well.
As an additional resource, CUNA’s Regulatory Advocacy Department has compiled this chart which details the sections of the proposed rules which are and are not mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Use of this chart may be helpful in submitting comments to both CUNA and to the CFPB regarding the proposed rules. If you have additional comments on any of the points listed above or any other sections of the proposals, please contact Deputy General Counsel Mary Dunn or Senior Assistant General Counsel Jared Ihrig before Wednesday, October 3.