On October 22, the CFPB published in the Federal Register the compliance bulletin and policy guidance regarding mortgage servicing transfers that it issued on August 19, 2014 (link to full text can be found here). It states that “[t]his bulletin is effective October 23, 2014 and applicable beginning August 19, 2014.” The bulletin is designed to protect consumers from the potential risks that “may arise in connection with transfers of mortgage servicing rights.”
The new guidance updates and replaces CFPB Bulletin 2013-01, released in February 2013, which also related to servicing transfers. The CFPB uses the new guidance to reinforce three messages that it has previously sent to the servicing industry. First, the CFPB expects all mortgage servicers to maintain a “robust” compliance management system. Second, the CFPB will continue to closely monitor the mortgage servicing industry and may engage in additional rulemaking in this area. Finally, the CFPB maintains that its continued focus on this area is due to the continuing high volume of servicing transfers.
The new guidance reinforces the principles contained in the original guidance and adds several aspects of mortgage servicing that will be subject to further regulation. The new guidance sets forth two new sections. The first, entitled “General Transfer-Related Policies and Procedures,” provides examples of policies and procedures that CFPB examiners may consider when reviewing whether servicers have fulfilled their transfer-related responsibilities. One example of these policies and procedures is “[e]nsuring that contracts require the transferor to provide all necessary documents and information at loan boarding.”
The second new section, entitled “Applicability of Other Parts of the New Servicing Rules to Transfers,” answers frequently asked questions about how the revised regulations will affect servicing transfers. Specifically, it includes how transfers may implicate the requirements outlined in:
- Error Resolution Procedures (12 CFR 1024.35) and Requests for Information (12 CFR 1024.36)
- Force-Placed Insurance (12 CFR 1024.37 and 12 CFR 1024.17(k))
- Early Intervention (12 CFR 1024.39)
- Continuity of Contact (12 CFR 1024.40)
- Loss Mitigation (12 CFR 1024.41)
- Regulations governing action before and after a borrower accepts an offer
This bulletin makes clear that this is an area that the CFPB plans to focus on in upcoming years. It is important for mortgage servicers to review the requirements and understand the CFPB’s specific areas of concern.