The Consumer Financial Protection Bureau (CFPB) issued final rules for Mortgage servicing that will be required to be in place by the early summer or late fall of 2017. This rules were finalized on August 4, 2016. The full requirements are listed on the CFPB website but I have provided a quick synopsis of the changes below.
- Additional foreclosure protection for borrowers. If a borrower becomes current on his or her payments after submitting a prior, complete loss mitigation application, mortgage servicers will be required to follow loss mitigation requirements more than once during the life of a loan.
- Definition of “Successor in Interest” and additional protections provided. The definition of “successor in interest” will include individuals who receive property after the death of a relative or joint owner, through a divorce, through certain trusts or from a spouse or parent. The final rule will also require servicers to comply with loss mitigation requirements for successors in interest.
- More information to borrowers in bankruptcy. Servicers will be required to provide borrowers in bankruptcy with certain periodic statements and early written intervention notices regarding loss mitigation options.
- Borrowers must be notified when their loss mitigation applications are complete. Servicers will be required to provide written notice informing borrowers that their loss mitigation applications are complete within five days of receiving a complete application.
- Specific timing requirements when servicing transfer occurs. When loan service is transferred, the transferee servicer will be required to comply with the same loss mitigation requirements within the same timeframes as the transferor servicer. The transferee servicer must also send the borrower a notice of the transfer within 10 business days of the transfer.
- Clarifications regarding dual-tracking. Servicers may not proceed with foreclosure until after the borrower’s loss mitigation application has been denied, withdrawn, or the borrower fails to perform.
- Clarification as to when a borrower becomes delinquent. A borrower becomes delinquent as of the date a full periodic payment becomes due and is unpaid.