Yesterday, the Consumer Financial Protection Bureau (CFPB) issued a final rule that will help mortgage servicers communicate with certain borrowers who are facing bankruptcy. This final rule gives mortgage servicers more flexibility in providing periodic statements to consumers who are entering or exiting bankruptcy.
Per the release from the CFPB:
“The Truth in Lending Act requires mortgage servicers to provide periodic statements to borrowers, and the Bureau has developed sample forms for servicers to use. The 2016 mortgage servicing rule requires that servicers send modified periodic statements or coupon books to certain consumers in bankruptcy starting April 19, 2018. The rule also addressed the timing for servicers to transition to providing or ceasing to provide modified periodic statements to consumers entering or exiting bankruptcy. After issuing the rule, however, the Bureau learned that certain technical aspects of the timing of this transition may create unintended challenges and be subject to different legal interpretations. In October 2017, the Bureau sought public comment on a proposed rule that would provide greater certainty to help servicers comply. Today the CFPB is finalizing that proposed rule. Specifically, the final rule provides a clear single-statement exemption for servicers to make the transition, superseding the single-billing-cycle exemption included in the 2016 rule.”
What this means to servicers is that they will have some relief in their disclosure requirements. For example, the current rules require that a servicer must immediately stop sending modified statements and start sending standard statements when a consumer enters into bankruptcy. This new final rule will provide more flexibility by replacing the single-billing-cycle exemption with a single-statement exemption.
The effective date for the rule is coming up quickly on April 19, 2018, as this is the date that the other sections of the original 2016 rule relating to bankruptcy-specific periodic statements and coupon books will become effective.
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