Through March 2, 2015, the State of Maryland is accepting comments on its proposed regulations of mortgage servicing transfers that include over 5,000 mortgages, whether as a single transfer or as a total at the end of a calendar year even if no single transfer was for 5,000 or more loans. Although many of the proposed requirements echo those promulgated by the Consumer Financial Protection Bureau, some of the Maryland proposed regulations go beyond the CFPB requirements.
For example, at least 60 days before the servicing transfer, a transferee servicer is required to provide the Maryland Commissioner of Financial Regulation with a myriad of data points regarding the status of the Maryland loans being transferred, such as:
- A breakdown of the Maryland loans by investor type and FICO score;
- The number of Maryland loans that are delinquent, broken out by 30+, 90+, and 360+ days delinquent;
- The number of Maryland loans with a permanent loan modification;
- The number of Maryland loans for which the borrower has completed a trial loan modification and the transferor servicer has not supplied an executed copy of a permanent loan modification to the borrower;
- The number of Maryland loans with a loan modification that is in a trial period;
- The number of Maryland loans where the borrower has submitted a complete loss mitigation application and the transferor servicer has not made a decision regarding eligibility for a loss mitigation option;
and other information.
While a transferee servicer may submit a written request to the Commissioner for a waiver from the 60-day disclosure requirement, the request may be granted only “if extenuating circumstances exist, such as where a court or regulator required the transfer.” In addition, a transferee servicer is required to designate an officer, director, or member of senior management as the contact person authorized to discuss, negotiate, and make decisions for the resolution of complaints related to the servicing of Maryland loans that are in the pool of transferred loans.
Furthermore, transferee and transferor servicers must comply with a host of operational policies and procedures designed to ensure, in particular, no interruptions in processing and implementation of loan modifications and other loss mitigation options. According to the Commissioner, “[t]he assumption is that compliance with the framework established by the proposed regulations will mitigate existing problems with larger transfers, including interruptions in service to distressed borrowers.”
The proposed regulations make loan servicers subject to enforcement under Md. Code. Ann., Fin. Inst. §§ 11-508, et al., including a restitution of money or property to the affected borrowers and taking steps to repair borrowers’ credit scores.
We will continue to monitor and report on this important set of proposed regulations.