• Borrowers in bankruptcy: The Final Rule
exempts a servicer from providing a periodic
statement to a borrower in bankruptcy so long as a
two-part test is satisfied. First, any consumer on the
loan must be a debtor in bankruptcy or must have
discharged personal liability for the mortgage loan
through bankruptcy. Second, one of the following
conditions must apply to any borrower on the loan:
o The borrower requests in writing that the
servicer cease providing periodic statements
or coupon books.
o The borrower’s bankruptcy plan provides
that the borrower will surrender the property,
provides for avoidance of the lien, or does not
otherwise provide for the payment of pre-
bankruptcy arrearages or payments due under
the mortgage loan.
o A court order provides for the avoidance of
the lien, lifts the automatic stay, or requires
the servicer to cease providing periodic
statements or coupon books.
o The borrower files with the bankruptcy court a
statement of intent to surrender the property.
INFORMATION REQUESTS, FORCE-PLACED
INSURANCE, AND SMALL SERVICERS
• The Final Rule clarifies the information that a
servicer must provide in response to information
requests. When Fannie Mae or Freddie Mac is
not the owner of the loan or the trustee of the
securitization trust in which the loan is held, a
servicer may respond by providing the name of
the trust and the name, address, and appropriate
contact information for the trustee. If Fannie Mae or
Freddie Mac is the owner of the loan or the trustee
of the securitization trust in which the loan is held,
a servicer may respond to a request about the
owner or assignee of the loan by providing only the
name of and contact information for Fannie Mae or
Freddie Mac, as applicable, without identifying the
name of the trust, unless the borrower specifically
• The Final Rule expands the scope of
requirements for force-placed insurance to account
for situations where the borrower has insufficient
insurance and provides servicers the option to
include the borrower’s mortgage loan account
number on force-placed insurance notices.
• When determining whether a servicer is
eligible for the small servicer exemption, the Final
Rule excludes mortgage loans that a servicer
voluntarily services for a non-affiliate without
requiring that the non-affiliate be a creditor or
assignee so long as the servicer does not receive
any compensation or fees.
The CFPB chose not to set an effective date
with optional early compliance; however, that
doesn’t mean servicers should delay in preparing
for the new rules. Implementation will not be easy
since servicers will need to update written policies
and procedures and compliance management
systems, develop operational requirements and IT
systems, test audit systems and processes, and train
employees and service providers.
Do you know an amazing woman?
Want to share her story?
If you have a
story you want
to tell, please