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Comp Blog

Q & A: Determining Small Servicer Threshold

By: Danielle Wright

CommentThursday - August 22, 2013

Q: How do I determine whether my credit union is a “small servicer” for purposes of the new mortgage lending rules, if I currently have less than 5,000 mortgage loans on the books, but I expect to exceed the threshold during the next year?

A: In determining whether a mortgage servicer is a Small Servicer, the servicer is evaluated based on the mortgage loans serviced as of January 1 for the remainder of the calendar year.

A mortgage servicer that ceases to qualify as a Small Servicer will have six months from the time it ceases to qualify or until the next January 1, whichever is later, to comply with any requirements from which the mortgage servicer is no longer exempt as a Small Servicer.

The calendar dates apply to both elements of the Small Servicer test -  exceeding the allowable maximum number of loans serviced, OR servicing mortgage loans a servicer either does not own or did not originate.

CFPB’s examples for determining Small Servicer thresholds:

i. A mortgage servicer that begins servicing more than 5,000 mortgage loans (or begins servicing one or more mortgage loans it does not own or did not originate) on October 1, and services more than 5,000 mortgage loans (or services one or more mortgage loans it does not own or did not originate) as of January 1 of the following year, would no longer be considered a Small Servicer on January 1 of that following year and would have to comply with any requirements from which it is no longer exempt as a Small Servicer on April 1 of that following year (which is six months from the date (October 1) that the servicer ceased to qualify as a Small Servicer.)

ii. A mortgage servicer that begins servicing more than 5,000 mortgage loans (or begins servicing one or more mortgage loans it does not own or did not originate) on February 1, and services more than 5,000 mortgage loans (or services one or more mortgage loans it does not own or did not originate) as of January 1 of the following year, would no longer be considered a Small Servicer on January 1 of that following year and would have to comply with any requirements from which it is no longer exempt as a Small Servicer on that same January 1.

iii. A mortgage servicer that begins servicing more than 5,000 mortgage loans (or begins servicing one or more mortgage loans it does not own or did not originate) on February 1, but services less than 5,000 mortgage loans (or no longer services mortgage loans it does not own or did not originate) as of January 1 of the following year, is considered a Small Servicer for that following year.






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