2016 MORTGAGE SERVICING RULE – CORRECTIONS AND GUIDANCE ON EARLY COMPLIANCE

On June 27, 2017, the Consumer Financial Protection Bureau (CFPB) issued two pieces of information related to the 2016 Mortgage Servicing Final Rule: 1) an amendment making non-substantive corrections, and 2) policy guidance related to early compliance with the rule.

Final Rule Issuing Corrections
The 2016 Mortgage Servicing Final Rule was issued by the CFPB on August 4, 2016, to amend certain provisions of the 2013 Mortgage Servicing Rules. The CFPB is now making corrections to those 2016 amendments. The corrections pertain to: 1) two typographical errors relating to the early intervention requirements; 2) the effective date (April 19, 2018) of official commentary relating to servicers’ ability to remove certain language in periodic statement, sample periodic statement forms that servicers may use for certain consumers in bankruptcy, and official commentary relating to the bankruptcy periodic statement exemptions and modified statements; and 3) the CFPB’s authority citation for Regulation Z. The Final Rule outlining these corrections is available here.

Policy Guidance Related to Early Compliance
There are two effective dates that apply to requirements in the 2016 Mortgage Servicing Final Rule, Thursday, October 19, 2017, and Thursday, April 19, 2018. The CFPB heard from the financial industry that complying with mid-week effective dates could pose operational challenges due to having limited time from the close of business on Wednesday to the opening of business on Thursday to adjust and test systems.

In order to allow servicers time to properly implement the requirements, the CFPB has issued non-binding Policy Guidance allowing for compliance with the 2016 Mortgage Servicing provisions up to three days before the applicable effective dates. The Guidance states, “[t]he bureau does not, therefore, intend to take supervisory or enforcement action for violations of existing Regulation X or Regulation Z resulting from a servicer’s compliance with the 2016 Mortgage Servicing Final Rule…” during this period of early compliance. As a result, for amendments effective on Thursday, October 19, 2017, servicers may comply begin complying with the rules during the period of Monday, October 16, through Wednesday, October 18, 2017. And for amendments effective on Thursday, April 19, 2018, servicers may begin complying with the rules during the period of Monday, April 16, through Wednesday, April 18, 2018.

The Policy Guidance is available here.

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