The Consumer Financial Protection Bureau has announced plans to reconsider the effectiveness of the Real Estate Settlement Procedures Act’s mortgage servicing rules. It is seeking public comment to assist with the assessment.
Mortgage loan servicers are typically responsible for several activities relating to mortgage loans, including: processing loan payments; responding to borrower inquiries; keeping track of principal and interest paid; managing escrow accounts; and pursuing collection and loss mitigation activities (including foreclosures and loan modifications) under certain circumstances.
In January 2013, the Bureau issued the Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act, It was subsequently amended before taking effect one year later. “The rule gave borrowers new consumer protections related to mortgage loan servicing, many of which were aimed at helping consumers who were having trouble making their mortgage payments,” the CFTB wrote in a May 4 statement.
The RESPA mortgage servicing rule requires, among other things, that servicers provide disclosures to borrowers related to force-placed insurance, respond to errors asserted by borrowers in a timely manner, and follow certain procedures related to loss mitigation applications and communications with borrowers.
For example, servicers generally must acknowledge written notices of error within five days and investigate and respond to the borrower in writing within 30 days.
The Bureau’s recent blog post added additional details. “In general, the consumer protection purposes of RESPA include that servicers respond to borrower requests and complaints in a timely manner, maintain and provide accurate information, help borrowers avoid unwarranted or unnecessary costs and fees, and facilitate review for foreclosure avoidance options,” it said.
The Dodd-Frank Act requires the CFPB to review some of its rules within five years after they take effect. It will issue an assessment of the RESPA mortgage-servicing rule, in a report due by January 2019. As required by law, the assessment will address the rule’s effectiveness in meeting the purposes and objectives of Dodd-Frank’s Title X and the specific goals of the rule, using available evidence and data.
“We see conducting the assessment as an opportunity,” the bureau’s statement adds. “Conducting the assessment will advance our knowledge of the benefits and costs of the key requirements of the RESPA mortgage servicing rule. The assessment will also provide the public with information on the mortgage servicing market, and help us to fulfill our commitment to be an evidence-based and effective agency.”
The Bureau does not anticipate that the assessment report will include specific proposals to modify any rules, although the findings made in the assessment will help to inform thinking as to whether to consider commencing a rulemaking proceeding in the future.
Consumers, consumer advocates, housing counselors, mortgage loan servicers, industry representatives, and other interested parties are invited to comment on the assessment plan. Comments can suggest sources of data, offer other recommendations, and generally provide information that helps the Bureau understand the rule’s effectiveness or improve this important work.
Comments on the plan will be due 60 days after it is published in the Federal Register.