The Consumer Financial Protection Bureau (CFPB) issued a final rule last week designed to help mortgage servicers communicate with borrowers facing bankruptcy.
Specifically, it gives mortgage servicers more latitude in providing periodic statements to consumers entering or exiting bankruptcy, as mandated by the CFPB’s 2016 mortgage servicing rule.
Through the Truth in Lending Act, mortgage servicers are required to provide periodic statements to borrowers. In 2016, the bureau put in place a rule requiring servicers to send modified periodic statements or coupon books to consumers facing bankruptcy starting April 19, 2018.
However, the CFPB has since determined that certain technical aspects of the timing of this transition may create unintended challenges for mortgage servicers. Further, it may be subject to different legal interpretations.
In October 2017, the CFPB asked for public comment on a rule that would provide greater certainty to help servicers comply. Last week, the CFPB finalized that proposed rule. The final rule provides a clear single-statement exemption for servicers to make the transition. This supersedes the single-billing-cycle exemption included in the 2016 rule.
The effective date for the rule remains April 19, 2018 – the same date that the other sections of the 2016 rule relating to bankruptcy-specific periodic statements and coupon books become effective.