COVID-related early intervention direct contact. The final rule includes temporary direct contact requirements related to COVID-19 as part of the early intervention rule. Until October 1, 2022, if service providers comply with the current requirement for early intervention of live contacts in paragraph 1024.39(a), they must submit the following information during this direct contact: Additional requirements for service providers other than small service providers. In addition to the above requirements, a repairer who does not meet the definition of a small repairer must also comply with the following additional rules: Although repairers are not required to comply with this rule on the effective date, they may voluntarily engage in activities that are required under this Final Rule prior to the effective date of the Final Rule. While the Bureau refuses to accept an earlier effective date for the reasons noted above, it does not intend to use its limited resources to take monitoring or enforcement action against a mortgage service provider that offers a borrower an optimized loan amendment that meets the criteria set out in paragraph 1024.41(c)(2)(vi)(A) based on the assessment of an incomplete loss mitigation application prior to the date. of Entry into force of this final rule. 86 Federal Regulation 34886-34887 (June 30, 2021). In addition, service providers must meet two basic information management standards: (i) maintenance records must be retained for at least one year after the disbursement or transfer of the loan service; and (ii) records and data for each mortgage must be retained in such a way that the service provider can compile them within five days into a loan processing file containing a schedule of all transactions in the account, including all escrow accounts, a copy of the mortgage or escrow deed. any notes from Service Personnel reflecting communication with the Borrower through the Account, the data fields relating to the Account in the Service Provider`s electronic systems, and copies of any documents or information provided by the Borrower in connection with error messages or loss mitigation procedures. The Reg.
X amendments apply to any „mortgage“ defined as a „federal mortgage“ covered by the ASPR, subject to the usual EPER exemptions for commercial loans, loans secured by 25 acres or more, and construction or other temporary financing, and in this case, excluding home equity lines of credit. The amendments to Regulation X include six new rules: forcibly placed insurance, error resolution and requests for information, service and information management policies and procedures, early intervention on defaulting borrowers, continuity of contact with defaulting borrowers, and loss mitigation procedures. With few exceptions, the changes to Reg. X service apply to a first or subordinated lien „mortgage“. The current ASPR initial disclosure and transfer requirements will continue to apply only to a mortgage with a first lien mortgage. The requirements for early intervention with defaulting borrowers, continuity of contact with defaulting borrowers, and loss mitigation procedures apply only to a mortgage secured by the borrower`s principal residence. As we all know by now, the rules are complicated and contain many specific and technical requirements. However, it is important for many community banks that the rules also contain several exceptions and exceptions to certain requirements for small service providers. In this article, we will look at the new rules, the definition of „small repairer“, the special requirements that apply to a small repairer, and then the additional requirements that apply to all other repairers. We also note that under the rules in Regulation X relating to mortgage servicing in general, „small service providers“ are exempted from these new requirements in the final rule. The CFPB`s final rules for implementing the Dodd-Frank mortgage servicing provisions will come into effect on January 10, 2014.
That date is not as far away as it seems. To determine what to address first, we need a good understanding of the requirements of the regulations and an understanding of when and to whom those requirements apply. Implementation. The CFPB has announced that it will issue guidelines to assist the mortgage industry in implementing the new rules by January 10, 2014, but these guidelines have not yet been published. And while the CFPB`s reimbursement guidelines are any indication, any guidance on maintenance rules will be helpful, but probably not detailed. Small service providers should review existing policies, procedures and processes, make changes and consider new controls to ensure timeliness for responding to requests for error resolution and information, providing mandatory insurance notices and assessing fees, and initiating foreclosure. Instant payment credit is not a new requirement and it is likely that you already have procedures in place. Large repairers will have a much heavier burden. Establishing detailed policies and procedures, including mitigation procedures, will likely require significant time and extensive staff training.
Creating invoices or coupon books requires programming and system changes and testing those changes, things that typically require long lead times. I hope you have already started. Civil liability. In the past, banks were subject to administrative enforcement measures by banking supervisors for most breaches of RESPA. However, with two exceptions, borrowers have a private cause of action for breaches of the new service requirements under either or both of Regulations X and Z. In issuing the amendments to Regulation X, the CFPB is relying on its authority under section 6 of the ASPR as amended by Dodd-Frank. Borrowers have a private cause of action for violation of section 6 and may bring a civil suit for actual damages, statutory damages of up to $2,000 for a design or practice of non-compliance (up to $2,000 per class action in a class action, not more than $1,000,000, or 1% of the net assets of the service), plus attorneys` fees. Exceptions are rules that prescribe written service and information management policies and procedures, and rules that dictate continuity of contact with defaulting borrowers that do not carry the risk of a private cause of action in the event of a breach. Violations of Reg. Z requirements are subject to standard civil liability provisions for violations of the Truth in Lending Act. There is therefore the possibility of significant liability in the event of a breach of the new maintenance requirements.
In particular, early intervention requirements for defaulting borrowers, seizure restrictions, and loss mitigation procedures can provide borrowers with a significant potential claim or defense related to mortgage foreclosures. And, of course, the CFPB and banking supervisors have the power vis-à-vis service providers under their jurisdiction to take enforcement action to ensure compliance with any new requirements. Additional credit switching options optimized for COVID-19. The final rule contains new exceptions to the general prohibition against providing a mitigation option based on an incomplete mitigation request without assessing a full mitigation application for all other available mitigation options. In addition to the short-term forbearance or redemption plans or COVID-related options set out in the CFPB Interim Final Rule as of June 2020, service providers may now offer certain additional COVID-19-related loan amendment options based on incomplete application if the following criteria are met: COVID-19 temporary foreclosure guarantees. The final rule includes enhanced enforcement protection, which will apply from the effective date until December 31, 2021. During this period, service providers cannot make the first notice or deposit required for seizure due to missed payments (and the borrower is more than 120 days in arrears under the existing rule) unless one of the following three safeguards has been met: To clarify expectations regarding this timeline, The Federal Housing Finance Agency (FHFA) quickly announced that Fannie Mae and Freddie Mac-Servicer must comply with foreclosure protections at the final. Rule prior to the effective date, effective August 1, 2021. Fannie Mae and Freddie Mac subsequently issued Lender`s Letter 2021-02 and Bulletin 2021-24, respectively, which implemented this policy. Small service defined. As mentioned above, the Reg.
Amendments Z apply to credit servicers, creditors and assignees, but there is an exception to certain requirements for a „small manager“ defined as a service provider that, together with affiliates: (i) provides services to 5,000 or fewer mortgages in a calendar year, and (ii) repays only those mortgages that it or its affiliate owns or currently owns.