The CFPB issued guidance and a final rule on Tuesday to provide clarity on mortgage servicing rules that are set to take effect in January.
The clarifications issued by the agency address post-mortem communication with a borrower’s family, contact with delinquent borrowers and the treatment of consumers who have filed for bankruptcy or are entitled to certain protections under the Fair Debt Collection Practices Act.
“As servicing implementation enters its final phases, we heard from many sources that it was important to address these remaining issues to ensure a smooth transition and provide certainty to the market,” CFPB Director Richard Cordray said. “When mortgage servicers better understand the rules they have to follow, that is better for consumers.”
In January, the agency issued new mortgage rules designed to protect struggling homeowners from unexpected costs.
In issuing its clarifications, the CFPB provided examples of servicer policies and procedures required to ensure that they have identified and communicated with relatives and heirs who have a legal interest in a home after the borrower dies. Such policies and procedures include allowing for continued payment on the mortgage and/or assumption of the mortgage by a legal heir.
The bulletin also clarified that a CFPB requirement mandating that servicers attempt to contact borrowers each time a payment is missed may be met through other contact with borrowers, adding that the method of contact can vary depending on how late the borrower is on payments.
Additionally, the bulletin clarified that even if delinquent borrowers have told servicers to stop communicating with them, certain notices and communications mandated under the Dodd-Frank Act are still required. The CFPB will also exempt servicers from being required to provide periodic statements and early intervention contacts with borrowers who are in bankruptcy.