September 13, 2016
By: Wendy Lee
The Consumer Financial Protection Bureau (CFPB or Bureau) announced its long-awaited changes to the mortgage servicing rules on August 4, 2016. The Bureau fulfilled its commitment to revisiting the exemptions given for borrowers in bankruptcies, it promulgated protections for successors in interest, and it amended loss mitigation rules to further address borrowers facing foreclosure. Adding icing to this regulatory cake, the Bureau also issued an interpretive rule under the FDCPA and provided an anticipated safe harbor for servicer communication that is required to comply with the mortgage servicing rules. This article focuses on the foreclosure-related provisions of these amendments, summarizing the general servicing policies and the loss mitigation application changes. To view CFPB’s Executive Summary, please visit: http://www.consumerfinance.gov/documents/805/08042016_cfpb_Mortgage_Servicing_Executive_Summary.pdf.
Default servicers and law firms should take note that these rules will not be the sea change of the 2014 rules but, in reviewing feedback, the Bureau took care to further clarify the intersection of loss mitigation and foreclosure. The relevant foreclosure-related rules are effective 12 months from the date they are published on the Federal Register; rules relating to successors in interest and periodic statements for borrowers in bankruptcy are effective 18 months from the date of publication in the Federal Register.
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