In yet another post-effective-date Regulatory Alert, NCUA has summarized the six areas covered in the new RESPA mortgage servicing rule: force-placed insurance, error resolution and information requests, policies and procedures, early intervention with delinquent members, continuity of contact with delinquent members, and loss mitigation.
Again, if any of this information is new to you, please review CUNA’s CompNOTES on the specific rule to ensure you understand your new mortgage servicing compliance requirements.
The following are 5 things NCUA wants you to know about each of these new rules:
- Once a credit union has a reasonable belief that the member has failed to maintain hazard insurance, the credit union must send two notices to the member and not have received any evidence that the member had the insurance in place continuously before
charging a fee or premium.
- Credit unions must cancel force-placed insurance within 15 days of receiving evidence that the member has the required hazard insurance in place and refund any fees or charges for periods of overlapping coverage.
- Before each anniversary of the purchase of force-placed insurance, credit unions must send a written notice to the member explaining the renewal and requesting evidence of hazard insurance.
- Additional force-placed rules apply for members with escrow accounts.
- Small servicers must comply with most of the force-placed insurance provision – but they may purchase force-placed insurance for a member with an escrow account whose mortgage payment is more than 30 days overdue, if the cost of the insurance to the
member is less than the amount the small servicer would need to disburse from the member’s escrow account to pay the premium.
Error Resolution and Information Requests
- All servicers must comply with these provisions – even small servicers.
- Servicers that are debt collectors under the FDCPA to whom a member has sent a written cease communication request must still comply with these provisions, unless the member specifically withdraws the request for the error resolution or information request.
- Upon receiving a written request for information the credit union must acknowledge receipt of the request within 5 days and within 30 to 45 days provide the information to the member or conduct a reasonable search and provide a written notification explaining
why the information is not available.
- Upon receiving a written request to resolve an error the credit union must acknowledge receipt of the request within 5 days and within 30 to 45 days correct the error and provide the member written notification of the correction or conduct an investigation
and provide written notification that no error occurred.
- Credit unions may set up a specific address for members to use to submit their notices of error and information requests, as long as members are provided with written notice of the address.
Policies and Procedures
- Small servicers are exempt.
- Credit unions’ policies and procedures must be designed to achieve the following:
- Access and provide timely and accurate information;
- Properly evaluate loss mitigation applications;
- Facilitate oversight of, and compliance by, service providers;
- Facilitate transfer of information during servicing transfers; and
- Inform members of written error resolution and information request procedures.
- Credit unions have flexibility to set policies, procedures, and methods in light of the size, nature, and scope of the credit union’s operations.
- Credit unions must retain records that document their actions with respect to a member’s mortgage loan account until one year after the date they discharged the mortgage or transferred the servicing.
- Credit unions must maintain the following documents and data in a way that allows them to compile them into a servicing file within 5 days:
- A schedule of all transactions credited or debited to the mortgage loan account;
- A copy of the security instrument establishing the lien securing the mortgage;
- Any notes your personnel create reflecting communications with the member about the mortgage loan account;
- To the extent applicable, a report of the data fields your electronic system creates related to the member’s mortgage loan account,
- Copies of documents and information a member submits as part of loss mitigation or error resolution requests.
Early Intervention with Delinquent Members
- Small servicers are exempt from these provisions.
- Servicers must establish or make good-faith efforts to establish live contact with borrowers by the 36th day of their delinquency and promptly inform such borrowers, where appropriate, that loss mitigation options may be available.
- Live contact with a member includes telephoning or conducting an in-person meeting with the member, but does not include leaving a recorded phone message.
- Servicers may provide loss mitigation information orally, in writing, or through electronic communication, as long as the information is shared promptly after establishing live contact.
- By the 45th day of delinquency, credit unions must provide delinquent members with a written notice about loss mitigation options.
Continuity of Contact with Delinquent Members
- Small servicers are exempt from these provisions.
- Credit unions must assign personnel to a delinquent member by the time the 45 day delinquency notice is sent;
- The member must be able to reach the assigned personnel by phone and the personnel must be able to response to inquiries and help with loss mitigation options.
- The assigned personnel must be able to retrieve, in a timely manner, the complete record of the member’s payment history and all information related to a loss mitigation application.
- The credit union’s policies and procedures must ensure that the personnel remain available until the member has made, without incurring a late charge, two consecutive mortgage payments.
- Small servicers are exempt from the majority of the loss mitigation requirements. However, they must not:
- Make the first notice or filing required to foreclose unless a member’s mortgage obligation is more than 120 days delinquent; and
- Move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a member is performing under the terms of a loss mitigation agreement.
- The loss mitigation provisions only apply to the member’s principal residence.
- Servicers that are debt collectors under the FDCA to whom a member has sent a written cease communication request must still comply with the loss mitigation provisions, unless the member specifically withdraws the request for loss mitigation.
- Servicers must evaluate completed loss mitigation applications within 30 days and inform the member of whether a loss mitigation option will be offered, and if the member is denied, the actual reasons for the denial.
- Servicers must refrain from beginning or completing the foreclosure process in certain circumstances when a member is being evaluated for loss mitigation options.
For more information see NCUA’s Regulatory Alert No: 14-RA-04.