WASHINGTON (1/17/13)--A final rule to require mortgage servicers to simplify billing statements, provide additional notice of rate changes to borrowers and help ensure that consumers know all of their options to prevent foreclosures have been released by the Consumer Financial Protection Bureau. The rule raises a key exemption threshold on monthly mortgage statements, a change that had been urged by the Credit Union National Association in its discussion with the CFPB.
The CFPB rule contains an exemption from some of its provisions for credit unions and other small financial institutions that service 5,000 or fewer loans, which they or an affiliate originate, up from a proposed 1,000-loan threshold.
"We actively advocated for the CFPB to increase the periodic statement requirement threshold from their proposed 1000 loans serviced to a higher number," noted CUNA President/CEO Bill Cheney.
"Our priority has been to ensure that as few credit unions as possible would be subject to these requirements. The 5,000 threshold is a marked improvement over the proposal, and while the devil is in the details, it appears small servicers such as credit unions will also be exempt from the loss mitigation application handling procedures, which is also a significant win for credit unions," he added.
Cheney said that CFPB Director Richard Cordray told him in a phone call prior to the rule's release that key changes would be incorporated in response to input the CFPB had received from credit unions and CUNA.
CUNA noted that more exemptions for credit unions may be contained in the final rule.
CUNA is reviewing the information the agency has released and additional positive provisions may be contained in the final rule.
The final rule, required by the Dodd-Frank Act, is set to go into effect in January 2014 and will require servicers to:
- Provide borrowers with monthly statements detailing the amount and due date of the next mortgage payment, a breakdown of payments by principal, interest, fees, and escrow, and any recent transaction activity;
- Inform borrowers of any available loss mitigation options; and,
- Provide additional notice of rate changes to borrowers.
Servicers will be prevented from moving forward with foreclosure proceedings if a borrower has submitted an application for a loan modification or foreclosure prevention measure. Servicers will also need to consider all available foreclosure alternatives that are available to borrowers, and may not steer borrowers toward a specific alternative. The regulations will also make it more difficult for servicers to move for foreclosure judgment or conduct a foreclosure sale, the CFPB said.
New data storage and form processing standards are also contained in the regulations.
The agency and other regulators will release plain language implementation guides and other materials to help ensure the regulations are more easily implemented. Model and sample forms have also been released for servicers, and the CFPB said it will reach out to educate consumers on the new rules.
CUNA is developing regulatory summaries and charts to outline how the CFPB mortgage regulations will impact key credit union concerns and this information will be on CUNA's website as soon as possible in coming days.