If we are merging two affiliated banks, are we exempt from the Real Estate Settlement Procedures Act (RESPA)’s mortgage servicing transfer notice requirements? We plan to continue accepting payments made in the acquired bank’s name and the payment address will not be changing. If we are exempt from RESPA’s notice requirements, is there a similar exemption under the Illinois Banking Act?

Yes, we believe you would be exempt from providing notice of any mortgage servicing transfers resulting from the merger under RESPA if there is no change in account numbers or amount of payment due. Regulation X states that “a transfer that results from mergers or acquisitions of servicers or subservicers” are not considered transfers of mortgage loan servicing that would trigger the requirement to provide notice, as long as there is no change in the payee, address to which payment must be delivered, account number, or amount of payment due.

We are not aware of a similar exemption under the Illinois Banking Act, which requires banks making residential mortgage financing transactions to provide written notice “if the servicing of a residential mortgage shall be transferred from the original mortgagee, within 45 days of such transfer.” Such notice must include “the name and address of the transferee; the name, address and telephone number to which inquiries by the residential mortgagor should be addressed; and the name and address to which the next 3 monthly installments are to be submitted to the transferee and the amount of each of such monthly installment.”

However, Regulation X and RESPA provide for preemption of state laws requiring mortgage transfer notices — servicers that comply with Regulation X’s requirements “shall be considered to have complied with the provisions of any State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of servicing of a loan.” Consequently, if a loan is covered by RESPA and Regulation X, we do not believe that you are required to provide notice when relying on an exemption to providing notice under RESPA and Regulation X.

For resources related to our guidance, please see:

Regulation X, 12 CFR 1024.33(b)(2)(i) (“The following transfers are not assignments, sales, or transfers of mortgage loan servicing for purposes of this section if there is no change in the payee, address to which payment must be delivered, account number, or amount of payment due:

(A) A transfer between affiliates;

(B) A transfer that results from mergers or acquisitions of servicers or subservicers;

(C) A transfer that occurs between master servicers without changing the subservicer.”)

Illinois Banking Act, 205 ILCS 5/48.2(e) (“Any bank, affiliate or subsidiary of such bank which shall engage in making residential mortgage financing transactions, shall with respect to each such transaction, provide the following: . . . (2) if the servicing of a residential mortgage shall be transferred from the original mortgagee, within 45 days of such transfer, written notice sent by certified mail, return receipt requested, to the mortgagor at the address of the property, unless the mortgagor shall have directed correspondence from the mortgagee shall be sent to another address, which notice shall set forth: the name and address of the transferee; the name, address and telephone number to which inquiries by the residential mortgagor should be addressed; and the name and address to which the next 3 monthly installments are to be submitted to the transferee and the amount of each of such monthly installment.”)

Regulation X, 12 CFR 1024.33(d) (“A lender who makes a mortgage loan or a servicer shall be considered to have complied with the provisions of any State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of servicing of a loan if the lender or servicer complies with the requirements of this section. Any State law requiring notice to the borrower at the time of application or at the time of transfer of servicing of the loan is preempted, and there shall be no additional borrower disclosure requirements. Provisions of State law, such as those requiring additional notices to insurance companies or taxing authorities, are not preempted by section 6 of RESPA or this section, and this additional information may be added to a notice provided under this section, if permitted under State law.”)

RESPA, 12 USC 2605(h) (“Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall be considered to have complied with the provisions of any such State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of the servicing of a loan if such person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of the borrower.”)