On Wednesday, the Consumer Financial Protection Bureau (CFPB) issued an interim final rule and a proposed rule in an effort to amending mortgage-servicing communication policies issued in 2016.
The interim final rule gives servicers a longer, 10-day window to provide the modified notices. The bureau believes that this change offers, “greater certainty for servicers’ ability to comply with the rule, without undermining important borrower protections.”
The proposed rule on periodic statements amends to certain Regulation Z mortgage servicing rules issued in 2016 relating to the timing for servicers to transition to providing modified or unmodified periodic statements and coupon books in connection with a consumer’s bankruptcy case.
In 2016, the bureau issued changes to the mortgage servicing rules that required 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.
According to the CFPB, under this law consumers were given the option to request companies stop contacting them except with “limited purposes.” However, the bureau’s concerned that this miscommunication doesn’t provide servicers enough, “flexibility regarding when to communicate about foreclosure prevention options with borrowers who have requested a cease in communication.”
CFPB Director Richard Cordray said Wednesday's action should make it easier for mortgage borrowers to receive timely information from their mortgage servicers about available options for saving their home, even if they have submitted a request to cease communication.
"In addition, we are proposing changes to clear up confusion about when to provide periodic statements with important loan information to borrowers in bankruptcy," Cordray said.
The interim final rule becomes effective on October 19, 2017, the same date that the related 2016 rule provisions become effective. The Bureau is seeking comment on this rule and will consider whether to revisit it in the future.
Click here to view the full interim final rule.
Click here to view the proposed rule on periodic statements.