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A new CFPB mortgage service and loss mitigation regime due to come into force in 2017 and 2018; a new FDCPA Safe Harbor CFPB white paper could give a further signal from CFPB on loss mitigation.
Consumer Financial Protection Bureau has published another set of changes related to the mortgage service. It adds safeguards for creditors - and thus increases the demands on service providers - and clarifies certain matters that have been questioned and confused by service providers. Firstly, a new definitive regulation makes several changes to the Dodd Frank mortgage service regulations under Regulations X and Z. This regulation will come into force 12 months ( or 18 month for certain provisions) after it is published in the Federal Register, which has not yet taken place but is anticipated soon.
The main rules of the CFPB are the following, as described below on the CFPB website: "Full" notification of the claim for mitigation: Service personnel must inform the borrower when their claim for harm reduction is "complete". "The CFPB notes that this is an important amendment as certain safeguards are activated when an app is "complete".
" Service providers, for example, are often forbidden from carrying out a compulsory enforcement transaction while they are examining an action for full harm reduction. Retry the protective measures to minimize damage: According to the applicable regulations, a mortgage operator is obliged to offer the borrower some protection against losses once during the term of the loan.
Under the new rules, service providers are required to reinstate these safeguards for those creditors who have updated their credit at any point since filing a full claim for a reduction of losses. Borrower in bankruptcy: Currently, service providers are not required to make regular declarations or information on harm reduction through early interventions available to bankrupt debtors.
Under the new regime, service providers will be required, under certain conditions, to make declarations to bankrupt debtors and an amended Early Warning Block containing information on harm reduction options. Service employees are not currently required to disclose information to creditors who have notified the service employee that they should no longer contact them under the Fair Debt Collection Practices Act ("FDCPA") about mitigating the impact of early interventions.
In general, the new regulation will require service employees to make available amended early warning systems in writing to inform these customers of options to reduce losses. Maintenance of transfers: Any new service provider must meet the harm reduction requirement within the same periods as the former service provider, with some exemptions. In the event that a Mortgagor makes an request just before the date of delivery, the new Service Provider must confirm the request within 10 working Days of the date of delivery.
Provided the borrower's request was completed before the transaction, the new service provider must assess it within 30 workingdays of the date of the transaction. In the meantime, if the new service provider needs more information to assess the request, the creditor would maintain some containment measures. CFPB's current policy prohibits service providers from taking certain enforcement action once they have received a full claim for relief from a debtor more than 37 business days before a planned sell.
The CFPB states, however, that it has established that in some cases the beneficiaries do not receive this immunity and that the legal advice of the service providers may not take reasonable action to defer enforcement procedures or transactions. Under the new rules, if a service provider has already filed the first enforcement notification or notification and received a full and timely request, the service provider and its enforcement advisor may not persuade the service provider and its enforcement advisor to comply with a judgement of execution or a selling order or a forced sales procedure, even if a third person carries out the selling procedure, unless the borrower's request for relief is duly rejected, withdrew or the lender omits to comply with a relief arrangement.
Article 41 on early support, uninterrupted contacts and reduction of losses applies only to a mortgage loan guaranteed by land which is the main place of domicile of a debtor. CFPB has already explained that the question of whether a real estate is the main domicile of the debtor is a factual request. According to the introduction to the final regulation, employees have voiced insecurity about the application of clauses such as the 120-day reprimand deadline for foreclosures in 12 CFR § 1024.
Accordingly, the CFPB adopts as part of the definitive regulation Opinion 30(c)(2)-1, which makes it clear that if a real estate is no longer the main domicile of a debtor, the proceedings laid down in 1024 shall be applicable. Forty-one ( 41) do not pertain to a mortgage loan guaranteed by that real estate. Part of the protection afforded to borrowers under the current service regulations depends on how long a mortgage is overdue.
In the service communities, this has led to particular confusions, as it is not clear what "delinquent" means and when "delinquency" begins in the sense of the service guidelines. Under the new law, default begins on the day on which a borrower's regular payments become due and payable. When a mortgage lender deaths, CFPB's current regulations demand that service providers have guidelines and processes in place to promptly identifying and communicating with members of the immediate families, inheritors or other third party known as "successors in the interest" who have a vested interest in the home.
According to the new rules, certified interested followers would get guaranteed right of way to many of the same terminations and documentation that the initial borrowers would get. In the new regulation, a wide interpretation of "successor in interest" is established, which usually covers those individuals who, in the event of the decease of a family member or co-lessee, as a consequence of Divorce or segregation, through certain trust arrangements or from a partner or parents, obtain assets.
They also require service providers to make available to prospective successor companies information on the documentation necessary to validate their successor in the interest. Regulations of this terminal service provision shall take effect 12 month after their date of entry in the Federal Register, with the exception that regulations on successor in interest and regulations on periodical settlements for bankrupts shall take effect 18 month after their date of entry in the Federal Register.
Although CFPB posted the new regulations on its own website on 4 August, the Federal Register has not yet posted them. The regulations therefore enter into force 12 and 18 month after the Federal Register has been made public. The CFPB has also adopted an interpretation under the Fair Debt Collection Practices Act (FDCPA), in supplement to the definitive serving policy, which clarifies the interplay between the FDCPA and the serving policy under Regulations X and Z. As the CFPB states in the issue, many mortgage providers who have purchased a mortgage loan at the point of "default" are covered by the FDCPA in relation to that mortgage loan.
This Interpretation shall constitute an expert report in accordance with FDCPA 813(e) and shall provide secure protection against responsibility for acts performed or omitted in good faith in accordance with the expert report, even if, after the act or omission, the expert report is wholly or partially revoked or modified or declared void by a court of law.
The interpretation represents an expert report within the meaning of the FDCPA and, in three cases, provides secure havens from responsibility for service providers operating in accordance with the current regulations on the service of mortgages: Service providers do not infringe FDCPA 805(b) if they communicate about the mortgage loan with certified successor companies who have interest in accordance with the regulations for mortgage service laid down in Regulations X or Z. Service providers do not infringe FDCPA 805(c) with regard to the mortgage loan if they submit the early warning in writing (12 CFR 1024) prescribed by Regulation X.
Service employees do not infringe FDCPA 805(c) if they react to borrower-initiated notifications of reduction of losses after the borrower has asserted the right to an injunction under FDCPA 805(c). This interpretation regulation, like the Service Directive, will take effect 12 month after its entry in the Federal Register, with the exception that the provisions on interested successor will take effect 18 month after its entry in the Federal Register.
The principles support, as described in the CFPB: The consumer should be able readily to obtain and use information on harm reduction options and how to request them. Redemption schemes and mortgage credit modification should in general be conceived in such a way as to create a payable and credit infrastructure accessible to the consumer.
For owner-occupied dwellings, options to reduce losses should be such that they are affordable throughout the remainder or prolonged repayment period. The consumer should be clearly and concisely informed about the choices made by service providers. Ministries of Finance and Housing and Urban Development and the Federal Housing Agency have also published a common whitepaper on the subject, outlining the experiences of the Home Affordable Modification Program and the basic policies they consider necessary for mitigating damage in the context of the challenges ahead.
Those are likely to remain working with industrial interest groups, consumers' groups and others to further debate and assess these approaches and to identify what justifies further work. While preparing for the implementation of the definitive rules, services should take particular care to train all staff involved in all aspects of the implementation of the new rules.
As maintenance regulations contain very peculiar and technically demanding information that is not always intuitively understood, it is essential for regulatory adherence that trainings are updated and kept up to date. Service providers should also bear in minds that this is not likely to be the last CFPB say in this area.
Publication of the principles and continuing evidence of the CFPB's review of this area show that the Agencys is far from ready to deal with maintenance in general and harm reduction in particular.