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Some of our customer’s mortgage loan payments are auto-debited from deposit accounts held at our bank. In those cases, does a monthly checking account statement satisfy Regulation Z’s mortgage periodic statement requirements, since it will show the debits for the mortgage payments? We service fewer than 5,000 mortgages, but we do sell some of our loans on the secondary market.

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It is possible to combine the periodic statements required for closed-end mortgage loans with checking account statements, provided that you include all of the additional disclosures required for mortgage periodic statements. However, Regulation Z exempts your institution from the mortgage periodic statement requirements altogether if you qualify as a “small servicer.”

As stated in a CFPB Small Entity Compliance Guide, you may combine mortgage periodic statements with checking account statements “so long as you meet all the requirements of the periodic statement disclosure, and combining the statements is not prohibited by regulations governing the other account.” However, such checking account statements would need to meet the timing, form and content requirements for mortgage periodic statements (including information on payments currently due and previously made, fees, transaction activity, servicer contact information, information regarding delinquencies, and more). If you are not a small servicer, you should examine your current checking statement format to determine whether it presently meets these disclosure requirements.

However, if your institution qualifies as a small servicer, you are exempt from Regulation Z’s mortgage periodic statement requirements. You will be considered a small servicer if your institution and any affiliates were servicing 5,000 or fewer mortgage loans as of January 1 of this year, provided that your institution (or an affiliate) originated or currently owns those loans. Since you service fewer than 5,000 mortgage loans, and assuming that you originated or currently own all of the mortgage loans that you service, your institution should qualify for the small servicer exemption.

For resources related to our guidance, please see:

  • Small Entity Compliance Guide, TILA RESPA Mortgage Servicing Final Rules, page 28 (“Similarly, you could combine the periodic statement with statements from a checking account or other account so long as you meet all the requirements of the periodic statement disclosure, and combining the statements is not prohibited by regulations governing the other account.”)
  • Regulation Z, 12 CFR 1026.41(e)(4) (Exemption from mortgage periodic statement requirements for small servicers.)