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Wednesday, March 18, 2015

ABA Expresses Concern about ‘Layering’ of Servicing Regs

ABA filed comments on the CFPB’s latest round of proposed changes to its servicing rule. For some provisions, ABA welcomed the changes, and in others it recommended additional changes based on banker feedback.

In its letter, however, ABA noted that the servicing rule already exceeds the requirements mandated by the Dodd-Frank Act and added that “the continued layering of detailed regulatory requirements, combined with the unfavorable capital treatment of servicing assets adopted by the federal banking agencies, will continue to decrease the value proposition of mortgage servicing for banks of all sizes.”

Specifically, ABA asked the CFPB to: limit the rule’s successor-in-interest provisions to situations involving the death of an obligor; revise and clarify several provisions related to loss mitigation; and expand its small servicer exemption for collection contract services. ABA also requested that the bureau not require banks to provide periodic statements to borrowers in bankruptcy.

While ABA generally supported the CFPB’s newly proposed definition of delinquency, it asked for flexibility for banks in adopting policies and procedures for when they will begin foreclosure during rolling delinquencies. ABA asked the bureau not to adopt its “overly complicated” changes to early intervention requirements in relatively narrow bankruptcy and debt collection situations.

ABA also asked for a longer, 18-month implementation date for the bureau’s changes to the successor-in-interest, early intervention and periodic statement requirements.

Read the letter.

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