Billing Statements and Beyond
BY CHRIS HAWKINS, ESQ.
WITHIN THE 2016 FINAL RULE, the Bureau imposed new requirements on servicers with respect to loans impacted by a bankruptcy case. The 2016 Final Rule will, subject to limited exemptions, require servicers to provide:
1. Written notice to borrowers in bankruptcy who have
become delinquent on their mortgage loan, of loss
mitigation options and available credit counseling; and
2. Modified periodic statements to borrowers whose loans
have been impacted by a bankruptcy.
While these requirements facially appear to be straightforward, certain challenges become evident when attempting
to implement them. Key considerations with respect to
implementation are set forth below.
The 2016 Final Rule reflects the continuation of some
general trends in the consumer bankruptcy arena. First,
the 2016 Final Rule reflects a trend toward offering more
loss mitigation options during and after a bankruptcy case.
This is clear from the number of bankruptcy jurisdictions
that have adopted formal loss mitigation programs, as well
as directives that have come from bank regulators specifi-
cally encouraging loan modifications (even for loans that
are subject to a bankruptcy discharge). Second, the 2016
Final Rule evidences a trend toward real-time disclosure
of the status of loans during bankruptcy. The amend-
ments to the Federal Rules of Bankruptcy Procedure in
2011 evidenced a shift toward formally disclosing all fees,
charges, payment changes, and post-petition delinquencies
that might occur during the course of a bankruptcy, as
well as making a formal determination as to the precise
status of the loan at the conclusion of a chapter 13 case.
Similarly, local rules in certain bankruptcy jurisdictions
require monthly or annual account statements related to
mortgage loans. The 2016 Final Rule simply takes these