Last week the NCUA issued Regulatory Alert No. 14-RA-03 reminding
credit unions of the effective date of the CFPB’s Mortgage Servicing rule---January
10, 2014 and also summarizing the requirements of the rule.
NCUA reminds credit unions that if a credit union
services mortgage loans, then it must comply with the CFPB’s Regulation Z
Mortgage Servicing requirements.
three major requirements of the Reg. Z Mortgage Servicing rule are:
Periodic statements for closed-end mortgage loans;
New and revised disclosures for certain adjustable-rate mortgages (ARMs); and
Prompt crediting of mortgage payments and responding to requests for payoff
Small servicers are exempt from only the
first of these requirements-- periodic statements. Your
credit union would be considered a small servicer if you, together with any
affiliates, service 5,000 or fewer mortgage loans, and you (or an affiliate)
are the creditor or assignee for all of them.
affiliate is defined as any company that controls your credit union, is
controlled by your credit union, or is under common control with your credit
union. For example, a credit union service organization (CUSO) that is owned by
a credit union is considered an affiliate.
you service any mortgage that you (or an affiliate) did not originate or do not
own, then you do not qualify as a small servicer, even if you service
5,000 or fewer loans overall. For example, if you service 1,500 loans – 1,499
of which you own or originated and one of which you neither own nor originated
but for which you own the servicing rights – you do not qualify as a
small servicer because you service a loan for which you (or an affiliate) are
not the creditor or assignee.
determine if you are a small servicer, count closed-end “mortgage loans” only. Do
not include loans you voluntarily service for a creditor or an assignee that is
not an affiliate and for which you do not receive any compensation or fees.
Also do not count any reverse mortgages, or timeshare plans.
small servicer exemption is determined each calendar year based on the loans
you and your affiliates service as of January 1 for the remainder of the year. You may lose the small servicer
exemption if you:
Service more than 5,000 loans; or
Take on the servicing of a loan you do
not own or did not originate.
If you lose the exemption, you have six months from the
date you stopped being a small servicer or until the next January 1 (whichever
is later) to comply with the periodic statement requirements.
For more information see NCUA’s
Regulatory Alert No. 14-RA-03.