LAST MINUTE REVISIONS TO REGULATION Z SERVICING RULES

On March 6, 2018 the Consumer Financial Protection Bureau (CFPB) issued a final rule to help mortgage servicers communicate with certain borrowers facing bankruptcy. The revisions to Regulation Z give mortgage servicers more latitude in providing periodic statements to consumers entering or exiting bankruptcy, as required by the Bureau’s 2016 mortgage servicing rule.

The 2016 mortgage servicing rule requires that servicers send modified periodic statements or coupon books to certain consumers in bankruptcy starting April 19, 2018. The rule also addressed the timing for servicers to transition to providing or ceasing to provide modified periodic statements to consumers entering or exiting bankruptcy. After issuing the rule, however, the Bureau learned that certain technical aspects of the timing of this transition may create unintended challenges and be subject to different legal interpretations. In October 2017, the Bureau sought public comment on a proposed rule that would provide greater certainty to help servicers comply. The final rule completes the process that began with the proposed rule. Specifically, the final rule provides a clear single-statement exemption for servicers to make the transition, superseding the single-billing-cycle exemption included in the 2016 rule.

The 27-page final rule is effective April 19, 2018, along with other servicing rule amendments affecting consumers in bankruptcy and successors in interest that go into effect that day.

A copy of the CFPB’s announcement is available at:  https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-final-rule-help-mortgage-servicers-communicate-certain-borrowers-facing-bankruptcy/

The final revisions to Regulation Z are available at:  https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing_final-rule_2018-amendments.pdf

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