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CFPB / RegulatoryMortgage

CFPB issues interim final rule on mortgage servicer communication

Proposes rule on periodic statements

The Consumer Financial Protection Bureau issued an interim final rule to help mortgage servicers communicate with borrowers at risk of foreclosure, updating parts of the final rule published a year ago.

In conjunction with the announcement, the bureau also proposed a rule modifying timing requirements for bankruptcy periodic statements.

As it stands, the CFPB’s final mortgage servicing rule is set to go into effect on Oct. 19.

And, since publishing the rule, the bureau has already put out some implementation guidance for servicers.

The CFPB said earlier this year that it does not intend to take supervisory or enforcement action for violations of existing Regulation X or Regulation Z resulting from a servicer’s compliance with the 2016 Mortgage Servicing Final Rule occurring up to three days before the applicable effective dates.

This new announcement goes beyond implementation guidance and aims to provide mortgage servicers more flexibility and certainty around requirements to communicate with certain borrowers.

When the CFPB announced the final rule, it made changes to require mortgage servicers to send written notices, referred to as early intervention notices, to certain consumers at risk of foreclosure who have requested a cease in communication under the Fair Debt Collection Practices Act.

Under this law, consumers have the option to request that companies stop contacting them except for limited purposes, the CFPB explained.

Once these borrowers become delinquent, mortgage servicers are generally required to send notices to these consumers every 45 days to inform them of available foreclosure prevention options but prohibit servicers from sending the notices more than once in a 180-day period.

However, the CFPB said it heard concerns that once a servicer sends a notice to one of these borrowers, the rule requires servicers to provide the next notice exactly on the 180th day after the prior one, regardless of whether it is a weekend or a holiday.

This new announcement addresses those issues. The interim final rule gives servicers a longer, 10-day window to provide the modified notices.

Like the final rule, the interim final rule becomes effective on Oct. 19, 2017. The bureau added that it is seeking comment on this rule and will consider whether to revisit it in the future.

Meanwhile, the CFPB also issued a proposed rule. The CFPB said it learned that certain technical aspects of the 2016 amendments regarding the timing for servicers to provide periodic statements in connection with a borrower’s bankruptcy case may create unintended challenges and be subject to different legal interpretations.

The proposed rule is intended to provide greater certainty for mortgage servicers regarding the timing for providing periodic statements in those circumstances.

The bureau is seeking public comment on the proposed rule, which is proposed to go into effect on April 19, 2018. This is the same date that the sections of the 2016 rule that the proposal would amend become effective.

The comment period on both the interim final rule and the proposed rule will close 30 days after publication in the Federal Register.


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