provide the name of the trust and the trustee’s name, address, and
appropriate contact information.
The Rule includes a revision of the force-placed insurance disclosures
and model forms for those situations where the servicer plans to
force-place insurance due to insufficient hazard insurance coverage,
rather than lapsed coverage or pending expiration of coverage. In
addition, the servicer now has the option to include the borrower’s
loan account number on all force-placed insurance notices.
Live contact with a delinquent borrower is deemed critical to
helping the borrower work through his or her payment issues
and for the servicer to ultimately collect the deficiency. The Rule
provides additional guidance for the early intervention live contact
and timing of the required written notices.
Servicers are not required to provide the borrower more than
one written notice within a 180-day period. If the borrower is 45
days or more delinquent at the end of the 180-day period, an additional written notice must be provided no later than 180 days after
the initial notice was provided. For borrowers who are less than 45
days delinquent at the end of any 180-day period, the servicer must
provide an additional written notice no later than 45 days after the
payment due date. This requirement does not apply to borrowers in
bankruptcy, or for borrowers who invoked cease communication
protection under the Fair Debt Collection Practices Act (FDCPA)
for the subject loan. In such cases, the servicer also does not need
to send the required written notice if no loss mitigation options
are available. However, if any loss mitigation option is available, the
servicer must comply with the written notice requirements for the
loan unless both exemption conditions are met.
The Bureau revised several loss mitigation requirements included within Regulation X, that require the servicer to do the
■ ■ ■ Execute loss mitigation requirements more than once during
the life of the loan for borrowers that become current, but
subsequently submit a loss mitigation application.
■ ■ ■ Join the foreclosure action of either a superior or subordinate
■ ■ ■ Select a reasonable date for the borrower to provide documents
and information to complete a loss mitigation application.
■ ■ ■ If a borrower provides a completed loss mitigation application more than 37 days prior to the foreclosures sale, do not
proceed with foreclosure activities unless the borrower’s loss
mitigation application is denied, withdrawn, or the borrower
fails to perform on a loss mitigation agreement. The servicer
must also inform foreclosure counsel not to move forward
unless one of the three conditions is met.
■ ■ ■ Provide a prescribed written notice to the borrower within five
days (excluding Saturdays, Sundays and legal holidays) after
it receives a completed loss mitigation application. The notice
must include specific information and disclosure statements
outlined in the Rule.
■ ■ ■ Exercise reasonable efforts to obtain documents and information that must be provided by third parties. This includes giving the borrower a written notice within 30 days of receiving
the borrower’s application, if the servicer lacks the required
third-party information and therefore cannot determine what
loss mitigation options to offer the borrower. All steps in the
evaluation process must be completed within 30 days (even
with the lack of third party information) and the borrower
must be promptly notified of the loss mitigation decision upon
receipt of the third-party information that was lacking. A servicer cannot deny a borrower’s loss mitigation request solely
because it lacks the third party information.
■ ■ ■ Consider offering a short-term payment forbearance program
or short-term repayment plan upon evaluation of an incomplete
loss mitigation application. The notification to the borrower
of this short-term arrangement must include the payment
terms and duration of the program as well as other pertinent
information related to the arrangement.
■ ■ ■ If the servicer subsequently determines the borrower is not
eligible for a loss mitigation option, the servicer can stop collecting documents and information from a borrower.
■ ■ ■ Adhere to the loss mitigation procedures and timelines when
the servicer receives a loan with a pending loss mitigation
application at the time of transfer.
Successors in Interest
The Rule added similar clarifying definitions for successors
in interest to Regulation X (RESPA) and Regulation Z. Use of
the term “borrower” in RESPA and “consumer” in Regulation
and Third Parties
While the business reasons for transferring servicing are
justified, the responsibility for compliance with servicing
rules cannot be delegated if servicing activities are out-sourced to a third party. Pursuant to the March 2016 GAO
Study—Nonbank Mortgage Servicers, the Bureau estimates
that over 1,300 non-depository servicers are now actively
servicing mortgages, and market share projections are
increasing. As this shift continues, servicers must not only
anticipate additional regulatory focus brought about by the
Rule, but they must also ensure any third parties involved
in its servicing activities comply with all the rules. A recent
Bureau enforcement action of one of the country’s largest
non-bank mortgage loan servicers addressed failures at
nearly every stage of the mortgage servicing process.