We do not believe you are required to provide monthly statements for residential mortgage loans since you qualify as a small servicer under Regulation Z. Regulation Z contains an express exemption from the requirement to send periodic statements for residential mortgage loans when such loans are serviced by a small servicer — regardless of whether the loan has an associated escrow account.
Under Regulation Z’s periodic notice requirements (which are inapplicable to your bank, as a small servicer), consumers may not opt out of receiving periodic statements altogether but can agree to receive them electronically instead. If statements are provided electronically, a notification that a consumer’s statement is available, with a link to where the statement can be accessed, may be provided in place of the statement itself.
For resources related to our guidance, please see:
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Regulation Z, 12 CFR 1026.41(e)(4) (“(i) A creditor, assignee, or servicer is exempt from the requirements of this section for mortgage loans serviced by a small servicer. . . . A small servicer is a servicer that: (A) Services, together with any affiliates, 5,000 or fewer mortgage loans, for all of which the servicer (or an affiliate) is the creditor or assignee. . . .”)
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Regulation Z, 12 CFR 1026.41(a)(1) (“This section applies to a closed-end consumer credit transaction secured by a dwelling, unless an exemption in paragraph (e) of this section applies. A closed-end consumer credit transaction secured by a dwelling is referred to as a mortgage loan for purposes of this section.”)
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Regulation Z, 12 CFR 1026.41(a)(2) (“A servicer of a transaction subject to this section shall provide the consumer, for each billing cycle, a periodic statement meeting the requirements of paragraphs (b), (c), and (d) of this section. . . .”)
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Regulation Z, 12 CFR 1026.41(c) (“The servicer must make the disclosures required by this section clearly and conspicuously in writing, or electronically if the consumer agrees, and in a form that the consumer may keep. Sample forms for periodic statements are provided in appendix H-30. Proper use of these forms complies with the requirements of this paragraph (c) and the layout requirements in paragraph (d) of this section.”)
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Regulation Z, Official Interpretations, Paragraph 41(a), Comment 4 (“A consumer may not opt out of receiving periodic statements altogether. However, consumers who have demonstrated the ability to access statements online may opt out of receiving notifications that statements are available. Such an ability may be demonstrated, for example, by the consumer receiving notification that the statements is available, going to the Web site where the information is available, viewing the information about their account and selecting a link or option there to indicate they no longer would like to receive notifications when new statements are available.”)
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Regulation Z, Official Interpretations, Paragraph 41(c), Comment 3 (“The periodic statement may be provided electronically if the consumer agrees. The consumer must give affirmative consent to receive statements electronically. If statements are provided electronically, the creditor, assignee, or servicer may send a notification that a consumer’s statement is available, with a link to where the statement can be accessed, in place of the statement itself.”)