Q: What requirements of the CFPB’s new mortgage servicing
rules are “small servicers” exempt from?
Servicers” are exempt from the following new mortgage lending regulations:
statements (§1026.41): The requirement to provide
periodic statements for residential mortgage loans;
insurance (§1024.37): In general, there is no Small Servicer exemption
to the force-placed insurance provisions. There is, however, a limited Small
Servicer exemption to the prohibition on the purchase of force-placed insurance
for consumers with escrow accounts under certain circumstances. A Small Servicer may purchase force-placed
insurance for a consumer with an escrow account whose mortgage loan obligation
is more than 30 days overdue, if the cost of the force-placed insurance to the
consumer is less than the amount the Small Servicer would need to disburse from
the consumer’s escrow account to pay the consumer’s hazard insurance.
& procedures (§1024.38): The “general servicing
policies, procedures and requirements” provisions of the mortgage servicing
continuity of contact (§1024.39 & §1024.40): Establishing live contact
with a delinquent borrower within 36 days, providing written notice within 45
days and assigning personnel to assist with inquiries and loss mitigation options.
mitigation (§1024.41): Most of the requirements
and restrictions relating to communicating with borrowers about, and the
evaluation of applications for, loss mitigation options. Except that a Small Servicer
must not make the first notice or filing required by law for any foreclosure
process unless a borrower’s mortgage loan obligation is more than 120 days
delinquent and must not move for foreclosure judgment or order of sale, or
conduct a foreclosure sale, if a borrower is performing according to the terms
of an agreement on a loss mitigation option.