WASHINGTON (8/23/13)--How does the Consumer Financial Protection Bureau define "small servicer" for the purpose of the new mortgage lending rules? Credit Union National Association Federal Compliance Counsel Colleen Kelly answers this and other questions in an ongoing CompBlog
series examining the bureau's treatment of small servicers.
To qualify as a small servicer, Kelly notes that a mortgage servicer must:
Service, together with any affiliates, 5,000 or fewer mortgage loans; and
Service only mortgage loans for which the mortgage servicer (or an affiliate) is the creditor or assignee.
Housing finance agencies would also qualify as small servicers for the purposes of CFPB mortgage regulations, she adds. Housing finance agencies are any public body, agency, or instrumentality created by a specific act of a state legislature or local municipality empowered to finance activities designed to provide housing and related facilities, through land acquisition, construction or rehabilitation.
CFPB definitions of creditor, assignee and affiliate are also clarified in the blog post.
Closed-end consumer credit transactions secured by a dwelling--except for charitably serviced mortgage loans, reverse mortgages and mortgage loans secured by time share plans--will count toward the 5,000 loan cap, Kelly adds in another blog post. Loans obtained by merger or acquisition and coupon book loans may also be considered when making a cap determination.
Kelly also outlines which mortgage servicers will not qualify as "small servicers" under CFPB regulations.
According to the bureau, if a mortgage servicer and its affiliate service fewer than 5,000 mortgages each, but more than 5,000 mortgages combined, they would not be considered "small servicers."
A mortgage servicer that services 3,100 mortgage loans--3,000 mortgage loans it owns or originated and 100 mortgage loans it neither owns nor originated, but for which it owns the mortgage servicing rights--would also not count as a small servicer.
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