Real Estate Settlement Procedures Act (Regulation X) and ...

1 This guide provides a summary of the Mortgage Servicing rules in effect as of April 19, 2018. The provisions in effect prior to April 19, 2018, that are no longer in effect after April 19, 2018, have been removed. March 29, 2018. Real Estate Settlement Procedures Act (Regulation X) and Truth in Lending Act (Regulation Z) Mortgage Servicing rules Small entity compliance guide Version log The Bureau updates this guide on a periodic basis to reflect finalized amendments and clarifications to the rule that impacts guide content, as well as administrative updates. Below is a version log noting the history of this document and its updates: Date Version Changes March 29, On March 8, 2018, the Bureau issued a final rule 2018 amending the 2016 Mortgage Servicing rules . This rule replace the single-billing-cycle exemption for periodic statements and coupon books with a single-statement exemption when servicers transition to providing modified or unmodified periodic statements and coupon books to consumers entering or exiting bankruptcy.

2 This final rule provides a single-statement exemption for the next periodic statement or coupon book that a servicer would otherwise have to provide, regardless of when in the billing cycle the triggering event occurs. (See Periodic statement and coupon book exemption for borrowers in bankruptcy" in Section ). Provisions of the mortgage servicing rules in effect prior to April 19, 2018, which are no longer in effect on or after April 19, 2018, have been removed. Miscellaneous formatting changes. October 18, In October 2017, the Bureau issued an interim final rule amending certain mortgage servicing rules . This guide 2 CONSUMER FINANCIAL PROTECTION BUREAU. 2017 refers to the October 2017 interim final rule as the October 2017 Interim Final Rule. Early intervention: The October 2017 Interim Final Rule clarifies the obligations for servicers to provide the early intervention written notice if the borrower has invoked the cease communication protection under the Fair Debt Collection Practices Act (FDCPA).

3 (See How often must I. provide a written notice to a borrower who has invoked the cease communication right under the FDCPA? in Section ). In July 2017, the Bureau published a final rule making technical corrections to the 2016 Mortgage Servicing Rule (July 2017 Final Rule). The July 2017 Final Rule clarifies the effective date for modifications to the sample notices provided in appendix H-30 and for commentary relating to periodic statements for certain borrowers in bankruptcy. (See Note on modifying sample periodic statements in Section and When do I have to start following these rules ? in Section ). Miscellaneous Administrative Changes. November In August 2016, the Bureau published a final rule 30, 2016 amending certain mortgage servicing rules . This guide refers to the August 2016 final rule as the 2016 Mortgage Servicing Rule.

4 Small servicer: The small servicer exemption generally applies to servicers who service 5,000 or fewer mortgage loans for all of which the servicer is the creditor or assignee. The 2016 Mortgage Servicing Rule excludes certain seller-financed transactions and mortgage loans voluntarily serviced for a non-affiliate, even if the non- 3 CONSUMER FINANCIAL PROTECTION BUREAU. affiliate is not a creditor or assignee, from being counted toward the 5,000 loan limit. (See Small Servicer Exemption in Section 3). Successors in interest: The 2016 Mortgage Servicing Rule adds definitions of successor in interest to subpart C of Regulation X and to Regulation Z. In addition, it includes provisions related to how a servicer confirms a successor in interest's identity and ownership interest in a property. It also generally provides that the mortgage servicing rules apply to successors in interest once a servicer confirms the successor in interest's status.

5 (See Successors in Interest in Section 4). Periodic statements: The 2016 Mortgage Servicing Rule clarifies certain periodic statement disclosure requirements relating to mortgage loans and requires servicers to provide certain borrowers in bankruptcy a modified periodic statement or coupon book. In addition, in certain circumstances, servicers generally are exempt from the periodic statement requirement for charged-off mortgage loans. (See Periodic Statements in Section 5). Force-placed insurance: The 2016 Mortgage Servicing Rule amends the force-placed insurance disclosures and model forms to account for instances when the borrower has insufficient coverage on the property, and it gives servicers the option to omit a borrower's mortgage loan account number on certain required notices. (See Force-Placed Insurance in Section 8).

6 Early intervention: The 2016 Mortgage Servicing 4 CONSUMER FINANCIAL PROTECTION BUREAU. Rule clarifies the obligations for servicers to establish or make good faith efforts to establish live contact with delinquent borrowers. In addition, the rule revises the exemption from early intervention for borrowers who are in bankruptcy or who have invoked cease communication protection under the Fair Debt Collection Practices Act (FDCPA). (See Early Invention with Delinquent Borrowers in Section 11). The definition of delinquency: The 2016 Mortgage Servicing Rule adopts a general definition of delinquency that applies to all servicing provisions of Regulation X and periodic statements for mortgage loans in Regulation Z. For more information on when a borrower is delinquent, see the Bureau's factsheet on Delinquency. Loss mitigation: The 2016 Mortgage Servicing Rule amends and modifies several sections of the loss mitigation rule.

7 (See Loss Mitigation Procedures in Section 13.) The final rule: o Requires servicers to meet the loss mitigation requirements more than once in the life of a loan for borrowers who become current on payments at any time between the borrower's prior complete loss mitigation application and a subsequent loss mitigation application;. o Modifies an existing exception to the 120- day prohibition on foreclosure filing to allow a servicer to join the foreclosure action of a superior or subordinate 5 CONSUMER FINANCIAL PROTECTION BUREAU. lienholder;. o Clarifies how servicers select the reasonable date by which a borrower should return documents and information to complete an application;. o Makes clear that servicers cannot move for foreclosure judgment or order of sale, or conduct a foreclosure sale, in certain circumstances.

8 O Requires that servicers provide a written notice to a borrower within five days (excluding Saturdays, Sundays, or legal holidays) after they receive a complete loss mitigation application and requires certain information to be included in the notice;. o Sets forth how servicers must attempt to obtain information not in the borrower's control and evaluate a loss mitigation application while waiting for third party information;. o Permits servicers to offer a short-term repayment plan based upon an evaluation of an incomplete loss mitigation application;. o Eases document collection requirements in connection with some loss mitigation applications; and o Addresses and clarifies how loss mitigation Procedures and timelines apply when a transferee servicer receives a mortgage loan for which there is a loss mitigation 6 CONSUMER FINANCIAL PROTECTION BUREAU.

9 Application pending at the time of a servicing transfer. Other amendments and technical corrections or clarifications to the mortgage servicing rules not listed above. The mortgage servicing rules address the servicing of mortgage loans, and are implemented in both Regulation X and Regulation Z. Regulation X uses the term borrower, and Regulation Z uses the term consumer.. Previous versions of the Mortgage Servicing Guide used the term consumer for ease of reading. This version replaced the term consumer throughout the guide with the term borrower.. A nonprofit servicer section was added to the Small Servicer Exemption section. Miscellaneous Administrative Changes. November 3, The Bureau published a final rule amending certain 2014 mortgage rules to: Provide a small servicer definition for nonprofit entities that meet certain requirements.

10 (See Small Servicer Exemption in Section 3). January 7, Miscellaneous Administrative Changes. 2014. November Servicer activities prohibited during the first 120. 27, 2013 days of delinquency: The Bureau's servicing rule prohibits servicers from making the first notice or filing under state law during the first 120 days of the borrower's delinquency. The October 2013. Final Rule clarifies how the rule works across 7 CONSUMER FINANCIAL PROTECTION BUREAU. different states with different foreclosure laws, and adopts a narrower definition of first notice of filing that closely tracks FHA's first legal . standard, which is familiar to industry. Also under the final rule, servicers will be allowed to send early notices that may provide beneficial information to borrowers about legal aid, counseling, or other resources. Procedures for obtaining follow-up information on loss-mitigation applications: According to the Bureau's servicing rule, within five days of receipt of a loss mitigation application, a servicer must acknowledge receipt of the application and inform the borrower whether it deems the application complete or incomplete.