Topic: CFPB 2014 Mortgage Rules: TILA and RESPA Mortgage Servicing Rules
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We have a balloon loan that has matured, and we are not renewing the loan. The customer has not made the balloon payment. Did the new RESPA 120 day foreclosure grace period begin to run after the loan matured?
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. Yes, we believe the loan should be considered “delinquent,” because it has matured and the borrower has not paid the balloon payment. The new RESPA servicing rules…
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During the ABA’s recent Mortgage Compliance Q&A call with the CFPB, the CFPB responded to a question by telling us to “check state law.” The question was how to define “delinquency” for purposes of the 120-day stay on foreclosure actions, particularly when a delinquent borrower is occasionally making payments.
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. The new RESPA servicing rules prohibit servicers from initiating a foreclosure action until “a borrower’s mortgage loan obligation is more than 120 days delinquent.” 12 CFR 1024.41(f)(1)(i).…
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One of our consumer mortgage loans (for owner-occupied residential real property) matured last week. If we extend the maturity date of the loan, would it be considered a refinance because it already matured (and as a result be subject to the new CFPB mortgage rules)?
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We agree that the CFPB’s new ability-to-repay requirements do not apply to renewals of existing loans, provided that the renewals are not considered “refinancings” under Regulation Z. Official Interpretations, 12 CFR 1026, Paragraph 43(a), Comment 1 (“§1026.43 does not apply to any change to an existing loan that is not treated as a refinancing under §1026.20(a)”). However,…
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We received a law bulletin from a law firm stating that the Illinois “grace period notice” requirement conflicts with the new CFPB rule requiring us to wait 120 days before initiating a foreclosure action. Do you agree?
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. No, you do not have to wait 120 days before mailing the Illinois “grace period notice” to delinquent borrowers, as required by 735 ILCS 5/15-1502.5(c). The new…
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How should we distribute the CHARM Handbook and the HUD Settlement Cost Booklet to customers who access our loan applications online? Currently, our online system automatically prints the both documents, leading to customer complaints. We don’t accept applications online; customers can submit applications by faxing, mailing, or bringing the application to a branch.
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We do not believe that the Consumer Handbook on Adjustable Rate Mortgages (CHARM Handbook) or the Settlement Cost Booklet (referred to in the rules as the “special information booklet”) need to be automatically printed with loan applications that your customers access online. As explained below, the CHARM Handbook can be provided to an online loan…
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What are the requirements under the CFPB’s new ARM rate change notice? We have a loan with the first payment under the initial rate adjustment due on December 1. What model form should we use, and when should we mail it?
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The first adjustable rate mortgage (ARM) rate change notice must “be provided to consumers at least 210, but no more than 240, days before the first payment at the adjusted level is due.” 12 CFR 1026.20(d). The staff commentary clarifies that this rule requires a lender or servicer to “deliver the notice or place it…
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Do the new RESPA rules requiring a 120-day grace period before initiating a foreclosure action include an exception for abandoned properties?
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No. There is no exception for abandoned properties in the RESPA prohibition on initiating a foreclosure action before the borrower is more than 120 days delinquent (provided that the property is the borrower's principal residence). 12 CFR 1026.41(f)(1)(i). The CFPB received requests from industry commenters to include such an exception, and the CFPB declined to…
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Under the new CFPB rule requiring us to delay filing a foreclosure action until a borrower is 120 days or more delinquent, what is the definition of the “first notice” in the foreclosure action?
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The new RESPA servicing rules prohibit servicers from initiating a foreclosure action (by filing a “first notice or filing” in the foreclosure process) until the borrower is more than 120 days delinquent. 12 CFR 1024.41(f)(1)(i). The CFPB’s staff commentary defines “first notice or filing” as “the earliest document required to be filed with a court or…
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On the new periodic statements, do we have to include a toll-free number if we are a community bank?
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If your institution qualifies as a “small servicer,” you will be exempt from all of the periodic statement requirements. 12 CFR 1026.41(e)(4). You will be considered a small servicer if your institution and any affiliates were servicing a total of 5,000 or fewer mortgage loans as of January 1 of this year, provided that your…
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Under the CFPB’s new mortgage servicing rules, when does the 120-day delinquency period start running?
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. The new RESPA servicing rules prohibit servicers from initiating a foreclosure action until “a borrower’s mortgage loan obligation is more than 120 days delinquent.” 12 CFR 1024.41(f)(1)(i).…