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Wednesday, October 16, 2013

CFPB Updates Mortgage Servicing Rule

The CFPB issued an interim final rule clarifying servicer obligations when a borrower is in bankruptcy or sends a cease communication request under the Fair Debt Collection Practices Act.

The interim final rule provides that if a borrower is in bankruptcy, a servicer is not required to provide periodic statements or comply with the servicing rule’s early intervention requirements. Similarly, servicers are not required to comply with the early intervention requirements when a borrower has invoked the FDCPA’s cease communication provisions.

Comments on the interim final rule will be due 30 days after publication in the Federal Register.

Read the interim final rule.

The updated rule was accompanied by guidance regarding communications with heirs to deceased borrowers as well as examples of reasonable steps for establishing live contact with delinquent borrowers. In addition, the guidance serves as an advisory opinion interpreting the interplay between the cease communication provision of the FDCPA and various disclosures required by the servicing rules.

The Bureau concluded that servicers are not liable under the FDCPA if they comply with disclosure requirements pertaining to error resolution, information requests, loss mitigation, periodic statements, force-placed insurance, and initial ARM reset notices.

Read the CFPB’s guidance.

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