Nearly six months have passed since the effective date of the Consumer Financial Protection Bureau’s (“CFPB”) mortgage servicing rules. To the extent you have not done so, now is a good time to assess your financial institution’s progress in complying with the rules and implementing policies and procedures that fit your organization.
Although many of the TILA and RESPA changes pertained to policies and procedures institutions must implement, some of the rules impacted individual borrower files, including the early intervention contacts and required written notices. Has your organization ensured that these notices and appropriate policies are in place? With respect to the exemptions from these RESPA provisions, has your organization been able to track bankruptcy and FDCPA activity in a way that helps your loss mitigation team do its job under the rules? Due to the volume of new rules and regulations, it is important to spend time assessing how you will show compliance to examiners and how your entity is using the rules to assist borrowers.
Finally, servicers need to remember the potential implication of Regulation B and the ECOA when it comes to providing valuations to borrowers seeking loan modifications. Although this is often regarded as an origination rule, the preamble to Regulation B and other CFPB materials explain that some loan modifications will be regarded as applications for extensions of credit thus requiring servicers to send loan valuations to borrowers.