The Consumer Financial Protection Bureau on Tuesday released guidance and interim final rule to provide great clarity for mortgage servicing rules that will take effect in January 2014, including interaction with surviving families of deceased borrowers.
Addressed in the rule clarifications are communications with family members after a borrower dies; contact with delinquent borrowers; and treatment of consumers who have filed for bankruptcy or invoked protections under the Fair Debt Collection Practices Act.
“As servicing implementation enters its final phases, we heard from many sources that it was important to address these remaining issues to ensure a smooth transition and provide certainty to the market,” said CFPB Director Richard Cordray in a statement. “When mortgage servicers better understand the rules they have to follow, that is better for consumers.”
The CFPB issued rules in January 2013 to establish new protections for struggling homeowners—including those facing foreclosure—from confusing or costly actions from servicers.
The recently-released clarifications are in response to the market’s requests for further explanation on three servicing issues: home retention efforts after the death of a borrower; the early intervention requirement to contact delinquent borrowers; and the intersection of servicing rules, bankruptcy code, and the Fair Debt Collection Practices Act.
Additionally, the interim final rule also clarifies regulations the CFPB issued in January to implement a Dodd-Frank Act provision requiring consumers to receive housing counseling before taking out a high-cost mortgage.
Written by Alyssa Gerace