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Comp Blog

NCUA Regulatory Alert ---the CFPB's Reg. Z Mortgage Servicing Requirements

By: Danielle Wright

CommentTuesday - January 14, 2014

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.

The three major requirements of the Reg. Z Mortgage Servicing rule are: 

  1. Periodic statements for closed-end mortgage loans;
  2. New and revised disclosures for certain adjustable-rate mortgages (ARMs); and
  3. Prompt crediting of mortgage payments and responding to requests for payoff amounts.

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.

An 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.

If 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.

To 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.

The 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.


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