CFPB Issues Final Mortgage Servicing Rules

The CFPB issued final rules Thursday intended to clarify and revise its mortgage servicing guidelines – regulations that some credit unions said will increase the heavy regulatory burden they already face.

The rules – issued as a result of the Dodd-Frank Act and encompassing more than 900 pages –amend regulations the agency first issued in 2013. The rules implement provisions of the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z).

The rules came on the heels of a GAO study, which found an increased regulatory burden has not yet dissuaded credit unions from originating and servicing mortgages at least as much as they have in the past.

The rules change provisions that address force-placed insurance notices, and early intervention and loss mitigation requirements; they also prompt crediting and periodic statement requirements. The rules also affect certain requirements under the Fair Debt Collection Act. In conjunction with the new rules, the CFPB released an interpretive rule under the Fair Debt Collection Practices Act relating to servicers’ compliance with certain mortgage servicing rules.

The CFPB said it issued the original rules in 2013 to avoid uncertainty and potential disruption in the national mortgage market at a time of economic vulnerability.

The bureau said the majority of the provisions will not cause significant new compliance burdens and that any new requirements in the 2013 rules were added “after careful weighing of incremental costs and benefits.”

NAFCU immediately disputed that notion, with Director of Regulatory Affairs Alexander Monterrubio stating there appears to be several provisions that will have a direct impact on credit unions.

“For example, the projected implementation dates for some portions of this rule are likely to coincide with credit unions’ ongoing compliance preparations under [the] CFPB’s revised Home Mortgage Disclosure Act rule,” Monterrubio said. “The HMDA rule changes alone will excessively tax the resources of many credit unions. We will continue to advocate for the bureau to reach back and correct the unintended consequences that have resulted from its rulemakings.”

On the other hand, the National Consumer Law Center praised the rules.

“Today, by finalizing revised mortgage servicing rules, the CFPB took an important step toward improving protections for distressed borrowers,” NCLC Staff Attorney John Rao said. “Many homeowners will find it easier to save their homes from foreclosure because of these new rules.

He said, however, the CFPB failed to address several issues, including problems that homeowners with little English proficiency face in communicating with their mortgage companies.

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