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Servicing Requirements for Crediting Payments and Payoff Statements

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Servicing Requirements for Crediting Payments and Payoff Statements

Servicers have been fined in the past for not following the below requirements that have been issued by the Consumer Federal Protection Bureau  and are both Regulation X and Z requirements. 

When receiving  a periodic payment it must be applied the day of receipt. Periodic payments consist of the amount necessary to cover principal, interest and escrow (if applicable).

If a servicer receives a payment less than the amount due for that period, payment are places in a reserve/suspense account.  Once the servicer has received enough funds to cover the periodic payment you must treat the accumulated amount as a periodic payment and credit to the account promptly.  

If a payoff is request servicers are required to provide an accurate payoff balance within 7 business days upon written request from the consumer. 

These rules do not only apply to servicers, but to creditors and assignees as well.  Keep in mind if you are just holding paper you must also comply with the above requirement.   See CFPB guidelines for exemption requirements (1026.41 (e) (4)).

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