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Comp Blog

Q & A: Small Servicer Exemptions

By: Danielle Wright

CommentFriday - August 23, 2013

Q:  What requirements of the CFPB’s new mortgage servicing rules are “small servicers” exempt from?

A: “Small Servicers” are exempt from the following new mortgage lending regulations:

  • Periodic statements (§1026.41):  The requirement to provide periodic statements for residential mortgage loans;  
  • Force-placed 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.  
  • Policies & procedures (§1024.38):  The “general servicing policies, procedures and requirements” provisions of the mortgage servicing rule;  
  • Early Intervention and 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.  
  • Loss 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.


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