The Consumer Financial Protection Bureau (CFPB) recently issued a bulletin, CFPB Bulletin 2013-12, to provide guidance in implementing some of the 2013 Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) Servicing Final Rules. As the end of the year approaches, it should be noted that the 2013 RESPA and TILA Final Rules take effect on January 10, 2014.
The Bulletin addresses the following rules:
1. Policies and procedures servicers must maintain regarding the identification of and communication with any successor in interest of a deceased borrower with respect to the property secured by the deceased borrower’s mortgage loan.
2. Communication with borrowers under the Early Intervention Rule.
3. Servicers’ obligation to provide certain notices/communications to borrowers who have exercised their right under the Fair Debt Collection Practices Act (FDCPA) barring debt collectors from communicating with them.
In summary, the guidance prrovides that starting on January 10, 2014, a servicer must have policies and procedures reasonably designed to ensure that, upon notification of the death of a borrower, the servicer promptly identifies and facilitates communication with a successor in interest7 of the deceased borrower with respect to the property that secures the deceased borrower’s mortgage loan.
For purposes of the Early Intervention Rule, “[d]elinquency begins on the day a payment sufficient to cover principal, interest, and, if applicable, escrow for a given billing cycle is due and unpaid.” Thus, once the rule goes into effect, for each billing cycle for which a borrower is delinquent for at least 36 days, servicers are required to make good faith efforts to establish live contact with the borrower by the 36th day and, if appropriate, to inform the borrower about the availability of loss mitigation options. Good faith efforts to establish live contact consist of “reasonable steps under the circumstances to reach a borrower and may include telephoning the borrower on more than one occasion or sending written or electronic communication encouraging the borrower to establish live contact with the servicer.”
CFPB also issued guidance regarding the interplay between certain of the 2013 RESPA and TILA Servicing Final Rules and the Fair Debt Collection Practices Act (FDCPA).19 The CFPB is providing this bulletin as an advisory opinion interpreting the FDCPA “cease communication” requirement in relation to the 2013 Mortgage Servicing Final Rules discussed below, under FDCPA section 813(e), 15 U.S.C. 1692k(e). As provided in that section, no liability arises under the FDCPA for an act done or omitted in good faith in conformity with an advisory opinion of the CFPB while that advisory opinion is in effect.
The FDCPA grants debtors the right generally to bar debt collectors from communicating with them. 20 To the extent the FDCPA applies to a servicer’s activities regarding a borrower, the “cease communication” provision of the FDCPA may make such a servicer uncertain whether it will be liable under the FDCPA for carrying out certain communications required by the servicing rules. The latest CFPB bulletin addresses such a servicer’s obligation with regard to certain provisions of the servicing rules requiring disclosures to and communications with borrowers who have defaulted on the payments of their mortgage loans when they have instructed the servicer to cease communicating with them.
The CFPB concluded that the FDCPA “cease communication” option does not generally make servicers that are debt collectors liable under the FDCPA if they comply with certain provisions of Regulation X (12 CFR 1024.35 (error resolution), 1024.36 (requests for information), 1024.37 (force-placed insurance), and 1024.41 (loss mitigation)) and Regulation Z (12 CFR 1026.20(d) (adjustable-rate mortgage (ARM) initial interest rate adjustment) and 1026.41 (periodic statement)).
The above information is intended as summary only, and for more information on CFPB rules and navigating through the Dodd-Frank Act, please contact one of the attorneys at Dalton & Tomich PLC.