82 FR 47953 - Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X)
BUREAU OF CONSUMER FINANCIAL PROTECTION Federal Register Volume 82, Issue 198 (October 16, 2017)
Federal Register Volume 82, Issue 198 (October 16, 2017)
| Page Range | 47953-47958 | |
| FR Document | 2017-21912 |
[Federal Register Volume 82, Number 198 (Monday, October 16, 2017)] [Rules and Regulations] [Pages 47953-47958] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-21912] ======================================================================== Rules and Regulations Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. ======================================================================== Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Rules and Regulations [[Page 47953]] BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1024 [Docket No. CFPB-2017-0031] RIN 3170-AA77 Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X) AGENCY: Bureau of Consumer Financial Protection. ACTION: Interim final rule with request for public comment. ----------------------------------------------------------------------- SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is issuing an interim final rule amending a provision of the Regulation X mortgage servicing rules issued in 2016 relating to the timing for servicers to provide modified written early intervention notices to borrowers who have invoked their cease communication rights under the Fair Debt Collection Practices Act. The Bureau requests public comment on this interim final rule. DATES: This interim final rule is effective on October 19, 2017. Comments must be received on or before November 15, 2017. ADDRESSES: You may submit comments, identified by Docket No. CFPB-2017- 0031 or RIN 3170-AA77, by any of the following methods:Email: [email protected]. Include Docket No. CFPB-2017-0031 or RIN 3170-AA77 in the subject line of the email. Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Mail: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552. Hand Delivery/Courier: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552. Instructions: All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1700 G Street NW., Washington, DC 20552, on official business days between the hours of 10 a.m. and 5:00 p.m. Eastern Time. You can make an appointment to inspect the documents by telephoning 202-435-7275. All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information, such as account numbers or Social Security numbers, should not be included. Comments will not be edited to remove any identifying or contact information. FOR FURTHER INFORMATION CONTACT: Joel L. Singerman, Counsel; or William R. Corbett or Laura A. Johnson, Senior Counsels, Office of Regulations, at 202-435-7700 or https://reginquiries.consumerfinance.gov/. SUPPLEMENTARY INFORMATION: I. Summary of the Interim Final Rule On August 4, 2016, the Bureau issued the Amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) (2016 Mortgage Servicing Final Rule) amending certain of the Bureau's mortgage servicing rules.\1\ The Bureau has learned, through its outreach in support of industry's implementation of the 2016 Mortgage Servicing Final Rule, that certain technical aspects of the rule relating to the timing for servicers to provide modified written early intervention notices to borrowers who have invoked their cease communication rights under the Fair Debt Collection Practices Act (FDCPA) may create unintended challenges in implementation. To alleviate any unintended challenges and facilitate timely provision of written early intervention notices to these borrowers, the Bureau is issuing this interim final rule to address the provision in Regulation X, which would otherwise become effective October 19, 2017.\2\ --------------------------------------------------------------------------- \1\ 81 FR 72160 (Oct. 19, 2016). \2\ The Bureau is addressing in a separate proposed rule another disclosure timing provision of the 2016 Mortgage Servicing Final Rule that would otherwise become effective April 19, 2018. --------------------------------------------------------------------------- Among other things, the 2016 Mortgage Servicing Final Rule addresses Regulation X's provision regarding early intervention requirements when a borrower has invoked the cease communication right under the FDCPA.\3\ Under that provision (and with certain exceptions not applicable here), a servicer subject to the FDCPA with respect to that borrower's loan must provide a modified written early intervention notice to that borrower on a periodic basis but is prohibited from doing so more than once during any 180-day period. --------------------------------------------------------------------------- \3\ The provisions of Regulation X discussed herein were amended by the 2016 Mortgage Servicing Final Rule but are not effective until October 19, 2017. To simplify review of this document and differentiate between those amendments and this rule, this document generally refers to the 2016 amendments as though they already are in effect. --------------------------------------------------------------------------- Based on feedback received through its efforts to support industry implementation of the 2016 Mortgage Servicing Final Rule, the Bureau understands that there is concern among some servicers that this 180- day prohibition in Sec. 1024.39(d)(3)(iii), read in conjunction with the early intervention provision's other timing requirements regarding written notices, requires servicers to provide the notice exactly on the 180th day after providing a prior notice. The Bureau did not intend this result and is concerned that the provision imposes too narrow a window for compliance and may provide insufficient guidance as to when and how servicers comply with the timing requirements under certain circumstances. Thus (and as explained in further detail below), the Bureau is issuing this interim final rule to amend Sec. 1024.39(d)(3)(iii) to give servicers a 10-day window to provide the modified notice at the end of the 180-day period. The Bureau believes that the interim final rule provides clearer and more flexible standards than the timing requirements adopted in the 2016 Mortgage Servicing Final Rule, offering greater certainty for implementation and compliance, without undermining important borrower protections relating [[Page 47954]] to early intervention. The Bureau seeks public comment on this interim final rule. II. Background A. 2016 Mortgage Servicing Final Rule and Implementation Support In August 2016, the Bureau issued the 2016 Mortgage Servicing Final Rule, which amends certain of the Bureau's mortgage servicing rules in Regulations X and Z.\4\ Most of these rules become effective on October 19, 2017, except that the provisions relating to bankruptcy periodic statements and successors in interest become effective on April 19, 2018. The Bureau has worked to support implementation by providing an updated compliance guide, other implementation aids, a technical corrections final rule,\5\ policy guidance regarding early compliance,\6\ and informal guidance in response to regulatory inquiries. Information regarding the Bureau's implementation support initiative and available implementation resources can be found on the Bureau's regulatory implementation Web site at https://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/mortserv/. Based on its ongoing outreach, the Bureau believes that industry has made substantial implementation progress regarding the 2016 Mortgage Servicing Final Rule. However, as discussed herein, the Bureau believes that a limited disclosure timing provision under Regulation X from the 2016 Mortgage Servicing Final Rule may pose unintended implementation challenges and is appropriate to address in an interim final rule before it goes into effect. --------------------------------------------------------------------------- \4\ 81 FR 72160 (Oct. 19, 2016). The amendments cover nine major topics and focus primarily on clarifying, revising, or amending provisions regarding force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X's servicing provisions; and prompt crediting and periodic statement requirements under Regulation Z's servicing provisions. The amendments also address proper compliance regarding certain servicing requirements when a person is a potential or confirmed successor in interest, is a debtor in bankruptcy, or sends a cease communication request under the FDCPA. \5\ Amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z); Correction, 82 FR 30947 (July 5, 2017). \6\ Policy Guidance on Supervisory and Enforcement Priorities Regarding Early Compliance With the 2016 Amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z), 82 FR 29713 (June 30, 2017). --------------------------------------------------------------------------- B. Purpose and Scope of Interim Final Rule As a result of feedback and questions received from servicers, the Bureau has decided to issue an interim final rule amending Regulation X relating to the timing for servicers to provide modified written early intervention notices to borrowers who have invoked their cease communication rights under the FDCPA. The Bureau believes this interim final rule provides clearer and more flexible standards than the timing requirements adopted in the 2016 Mortgage Servicing Final Rule, offering greater certainty for implementation and compliance, while also not undermining borrower protections. III. Legal Authority The Bureau is issuing this interim final rule pursuant to its authority under RESPA and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act),\7\ including the authorities discussed below. This interim final rule amends a provision previously adopted by the Bureau in the 2016 Mortgage Servicing Final Rule. In doing so, the Bureau relied on one or more of the authorities discussed below, as well as other authority. The Bureau is issuing this interim final rule in reliance on the same authority and for the same reasons relied on in adopting the relevant provisions of the 2016 Mortgage Servicing Final Rule, as discussed in detail in the Legal Authority and Section-by-Section Analysis parts of the 2016 Mortgage Servicing Final Rule. --------------------------------------------------------------------------- \7\ Public Law 111-203, 1245 Stat. 11376 (2010). --------------------------------------------------------------------------- A. RESPA Section 19(a) of RESPA, 12 U.S.C. 2617(a), authorizes the Bureau to prescribe such rules and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of RESPA, which include its consumer protection purposes. In addition, section 6(j)(3) of RESPA, 12 U.S.C. 2605(j)(3), authorizes the Bureau to establish any requirements necessary to carry out section 6 of RESPA, and section 6(k)(1)(E) of RESPA, 12 U.S.C. 2605(k)(1)(E), authorizes the Bureau to prescribe regulations that are appropriate to carry out RESPA's consumer protection purposes. The amendments or clarifications to Regulation X in the interim final rule are intended to achieve some or all these purposes. B. The Dodd-Frank Act Section 1022(b)(1) of the Dodd-Frank Act, 12 U.S.C. 5512(b)(1), authorizes the Bureau to prescribe rules ``as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.'' RESPA and title X of the Dodd-Frank Act are Federal consumer financial laws. Section 1032(a) of the Dodd-Frank Act, 12 U.S.C. 5532(a), provides that the Bureau ``may prescribe rules to ensure that the features of any consumer financial product or service, both initially and over the term of the product or service, are fully, accurately, and effectively disclosed to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or service, in light of the facts and circumstances.'' The authority granted to the Bureau in section 1032(a) of the Dodd-Frank Act is broad and empowers the Bureau to prescribe rules regarding the disclosure of the ``features'' of consumer financial products and services generally. Accordingly, the Bureau may prescribe rules containing disclosure requirements even if other Federal consumer financial laws do not specifically require disclosure of such features. Section 1032(c) of the Dodd-Frank Act, 12 U.S.C. 5532(c), provides that, in prescribing rules pursuant to section 1032 of the Dodd-Frank Act, the Bureau ``shall consider available evidence about consumer awareness, understanding of, and responses to disclosures or communications about the risks, costs, and benefits of consumer financial products or services.'' Accordingly, in issuing the interim final rule to amend provisions authorized under section 1032(a) of the Dodd-Frank Act, the Bureau has considered available studies, reports, and other evidence about consumer awareness, understanding of, and responses to disclosures or communications about the risks, costs, and benefits of consumer financial products or services. IV. Administrative Procedure Act To the extent that notice and comment would otherwise be required, the Bureau finds that there is good cause to publish this interim final rule without notice and comment and for the rule to be effective less than 30 days after publication. See 5 U.S.C. 553(b)(3)(B), (d)(3). As explained elsewhere in this rule, the Bureau has heard concerns from servicers that the 180-day prohibition in current [[Page 47955]] Sec. 1024.39(d)(3)(iii) requires them to provide the modified early intervention notice to delinquent borrowers who have invoked their right to cease communication under the FDCPA exactly on the 180th day after providing a prior notice. The Bureau did not intend this result and is concerned that current Sec. 1024.39(d)(3)(iii) imposes too narrow a window for compliance and could cause legal risk for servicers, particularly when the 180th day falls on a Saturday, Sunday, or public holiday. This interim final rule amends Sec. 1024.39(d)(3)(iii) to give servicers a 10-day window to provide the modified notice at the end of the 180-day period. The Bureau believes that this amendment will offer greater certainty for implementation and compliance, while also not undermining borrower protections. The Bureau finds that it would be impracticable to provide notice and comment before finalizing this rule because Sec. 1024.39(d)(3)(iii) would otherwise become effective on October 19, 2017, and could cause unintended challenges in the implementation of the notice requirement. For similar reasons, the Bureau finds that it is impracticable to provide a 30-day period between publication of this rule and its effective date. The Bureau is requesting comment on this rule. Based on any comments received (and mindful of the need to avoid market disruption), the Bureau will consider whether to revisit this rule. V. Section-by-Section Analysis A. Regulation X Section 1024.39 Early Intervention Requirements for Certain Borrowers 39(d) Fair Debt Collection Practices Act--Partial Exemption 39(d)(3). In this interim final rule, the Bureau is amending Sec. 1024.39(d)(3)(iii) to specify in more detail when a servicer must provide the modified written early intervention notice, as required by Sec. 1024.39(b) and (d), at the end of the 180-day period after the servicer provided a prior written notice. In general, Sec. 1024.39(d) provides a partial exemption from the early intervention requirements for servicers that are subject to the FDCPA with respect to borrowers who have invoked their cease communication rights pursuant to section 805(c) of the FDCPA.\8\ Section 1024.39(d)(3) requires servicers to provide a modified written early intervention notice to those borrowers under certain circumstances, but Sec. 1024.39(d)(3)(iii) prohibits a servicer from providing the modified notice more than once during any 180-day period. As revised under this interim final rule, Sec. 1024.39(d)(3)(iii) gives servicers a 10-day window to provide the required notices at the end of the 180-day period. In particular, revised Sec. 1024.39(d)(3)(iii) retains the 180-day prohibition and also specifies: (1) If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice, and (2) if a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. --------------------------------------------------------------------------- \8\ This section-by-section analysis discusses Sec. 1024.39(d) generally in terms of a borrower's cease communication notification and its effect on a servicer's obligations under the early intervention requirements, but the provision applies equally to a borrower's notice to the servicer that the borrower refuses to pay a debt. See FDCPA section 805(c) (``If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt . . . .''). --------------------------------------------------------------------------- Section 1024.39(b) generally requires that a servicer provide a written early intervention notice prior to the 45th day of delinquency, and again no later than 45 days after each payment due date so long as the borrower remains delinquent. Section 1024.39(b) further provides that a servicer is not required to provide a notice more than once in any 180-day period, but also that a servicer must provide the written notice no more than 180 days after the servicer has previously provided the notice if the borrower remains delinquent and is 45 days or more delinquent at the end of the 180-day period. Among other things, Sec. 1024.39(d) modifies the timing requirements for providing the written notice required by Sec. 1024.39(b) when a borrower has invoked the cease communication right under the FDCPA. Under Sec. 1024.39(d)(2), a servicer subject to the FDCPA with respect to that borrower's loan is exempt from the written notice requirements of Sec. 1024.39(b), but only if no loss mitigation option is available, or while any borrower on that mortgage loan is a debtor in bankruptcy. If neither of those conditions is met, Sec. 1024.39(d)(3) provides that the servicer must comply with the written notice requirements of Sec. 1024.39(b), as modified by Sec. 1024.39(d)(3)(i) through (iii).\9\ The relevant provision for purposes of this interim final rule is Sec. 1024.39(d)(3)(iii), which prohibits a servicer from providing the written notice more than once during any 180-day period. In the preamble to the 2016 Mortgage Servicing Final Rule, the Bureau noted that this 180-day prohibition reduces the risk that the modified written early intervention notice will be used to undermine a borrower's cease communication right under FDCPA section 805(c). --------------------------------------------------------------------------- \9\ Section 1024.39(d)(3)(i) requires that the notice include a statement that the servicer may or intends to invoke its specified remedy of foreclosure and states that Model clause MS-4(D) in appendix MS-4 to Regulation X may be used to comply with this requirement. Section 1024.39(d)(3)(ii) provides that the notice may not contain a request for payment. --------------------------------------------------------------------------- Concurrently with the 2016 Mortgage Servicing Final Rule, the Bureau issued an interpretive rule constituting an advisory opinion under FDCPA section 813(e), 15 U.S.C. 1692k(e), that, in part, interprets the FDCPA cease communication provisions in relation to the written early intervention requirements in Regulation X.\10\ Specifically, the interpretive rule provides a safe harbor from liability under FDCPA section 805(c) where a servicer that is a debt collector with respect to a mortgage loan is required by Sec. 1024.39(d)(3) to provide a modified written early intervention notice to a borrower who has invoked the cease communication right. --------------------------------------------------------------------------- \10\ See Bureau of Consumer Fin. Prot., Official Bureau Interpretations: Safe Harbors from Liability under the Fair Debt Collection Practices Act for Certain Actions Taken in Compliance with Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z), 81 FR 71977 (Oct. 19, 2016). --------------------------------------------------------------------------- After issuing the 2016 Mortgage Servicing Final Rule and the interpretive rule, the Bureau received several inquiries about how Sec. 1024.39(d)(3)(iii) modifies Sec. 1024.39(b)'s timing requirements. Section 1024.39(b) does not require a notice more than once in a 180-day period but, except as otherwise provided in Sec. 1024.39(d)(3)(iii), permits more frequent provision of the written notices. It also provides that, if a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 180 days after the provision of the prior written notice. However, with regard to a loan for which a borrower has invoked the cease communication right as [[Page 47956]] described above, Sec. 1024.39(d)(3)(iii) prohibits a servicer from providing the notice more than once in any 180-day period. The Bureau is concerned that, as adopted by the 2016 Mortgage Servicing Final Rule, Sec. 1024.39(d)(3)(iii) imposes too narrow a window for compliance and could provide insufficient guidance as to when and how servicers comply with the timing requirements under certain circumstances. The 180-day prohibition in Sec. 1024.39(d)(3)(iii), read in conjunction with Sec. 1024.39(b), provides only one day for a servicer to provide a subsequent written notice.\11\ Therefore, where a borrower that has invoked the cease communication right is 45 days or more delinquent at the end of the 180-day period after the servicer provided a prior written notice, a servicer would have to provide the next notice on the 180th calendar day after the prior notice, whether or not this day falls on a Saturday, Sunday, or public holiday. The Bureau narrowly tailored the timing requirements in Sec. 1024.39(d) to prevent a servicer subject to the FDCPA from sending frequent, repeated notices that may undermine a borrower's cease communication right under section 805(c) of the FDCPA. The Bureau did not, however, intend for servicers subject to Sec. 1024.39(d)(3) to have a one-day window to provide a subsequent written early intervention notice to borrowers who have invoked their cease communication rights. Thus, the Bureau is amending Sec. 1024.39(d)(3)(iii). --------------------------------------------------------------------------- \11\ The Bureau also understands that some stakeholders instead may be interpreting Sec. 1024.39(b) and (d)(3)(iii) together as permitting a servicer to provide the subsequent written notice required by Sec. 1024.39(b) sometime after the 180th day but before the end of the next 180-day period (e.g., by the 360th day). The Bureau does not believe such a reading of Sec. 1024.39(b) and (d)(3)(iii) together is tenable and is concerned that, if servicers act in accordance, borrowers would be deprived of timely receiving important loss mitigation information. --------------------------------------------------------------------------- As amended Sec. 1024.39(d)(3)(iii) retains the general 180-day prohibition but also specifies that, if a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. In effect, the interim final rule provides servicers a 10-day window to provide any required notices at the end of the 180-day period. The Bureau believes that a 10-day window at the end of the 180- day period affords servicers sufficient time to provide the notice while also ensuring that servicers provide the subsequent notice in a timely way, maximizing a borrower's opportunities to pursue loss mitigation and avoid further delinquency. The Bureau seeks comment on whether the interim final rule permits servicers to timely provide the notice at the end of the 180-day period. The Bureau also seeks comment on whether the interim final rule adequately protects consumers who have invoked their cease communication rights while affording them timely access to information about loss mitigation. VI. Effective Date Section 1024.39(d), as amended by the 2016 Mortgage Servicing Final Rule, becomes effective October 19, 2017. Thus, this interim final rule, which further amends Sec. 1024.39(d)(3)(iii), also becomes effective October 19, 2017. VII. Dodd-Frank Act Section 1022(b) Analysis In developing this interim final rule, the Bureau has considered the potential benefits, costs, and impacts as required by section 1022(b)(2) of the Dodd-Frank Act. Specifically, section 1022(b)(2) calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of consumer access to consumer financial products or services, the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act, and the impact on consumers in rural areas. In addition, 12 U.S.C. 5512(b)(2)(B) directs the Bureau to consult, before and during the rulemaking, with appropriate prudential regulators or other Federal agencies, regarding consistency with the objectives those agencies administer. The Bureau consulted, or offered to consult with, the prudential regulators, the Securities and Exchange Commission, the Department of Housing and Urban Development (HUD), the HUD Office of Inspector General, the Federal Housing Finance Agency, the Federal Trade Commission, the Department of the Treasury, the Department of Agriculture, and the Department of Veterans Affairs, including regarding consistency with any prudential, market, or systemic objectives administered by these agencies. The Bureau previously considered the benefits, costs, and impacts of the 2016 Mortgage Servicing Final Rule's major provisions.\12\ The baseline \13\ for this discussion is the mortgage servicing market as it would exist ``but for'' this interim final rule; that is, the Bureau considers the benefits, costs, and impacts of this interim final rule on consumers and covered persons relative to the baseline established by the 2016 Mortgage Servicing Final Rule. --------------------------------------------------------------------------- \12\ 81 FR 72160, 72351 (Oct. 19, 2016). \13\ The Bureau has discretion in any rulemaking to choose an appropriate scope of analysis with respect to potential benefits, costs, and impacts and an appropriate baseline. --------------------------------------------------------------------------- In considering the relevant potential benefits, costs, and impacts of this interim final rule, the Bureau has used feedback received to date and has applied its knowledge and expertise concerning consumer financial markets. The discussion below of these potential costs, benefits, and impacts is qualitative, reflecting both the specialized nature of the amendments and the fact that the 2016 Mortgage Servicing Final Rule, which establishes the baseline for the Bureau's analysis, is not yet in effect. The Bureau requests comment on this discussion generally as well as the submission of data or other information that could inform the Bureau's consideration of the potential benefits, costs, and impacts of the interim final rule. The interim final rule's provisions generally would decrease burden incurred by industry participants by modifying the timing requirements for certain disclosures required under the 2016 Mortgage Servicing Final Rule. As is described in more detail below, the Bureau does not believe that these changes would have a significant enough impact on consumers or covered persons to affect consumer access to consumer financial products and services. Timing of written early intervention notice for borrowers who have invoked their cease communication rights under the FDCPA. The interim final rule revises Sec. 1024.39(d)(3)(iii) to specify when a servicer must provide the modified written early intervention notice, as required by Sec. 1024.39(b) and (d), at the end of the 180-day period after the servicer provided a prior written notice. Section 1024.39(b) requires that a servicer must provide a written early intervention notice to certain borrowers no more than 180 days after the servicer previously provided the notice. Section 1024.39(d) [[Page 47957]] generally provides that servicers that are subject to the FDCPA with respect to borrowers who have invoked their cease communication rights pursuant to section 805(c) of the FDCPA must provide a modified written early intervention notice to those borrowers under certain circumstances. As originally adopted Sec. 1024.39(d)(3)(iii) would have provided that a servicer may not provide the modified notice more than once during any 180-day period. Currently, the 180-day prohibition in Sec. 1024.39(d)(3)(iii), read in conjunction with Sec. 1024.39(b), provides only one day for a servicer to provide a subsequent written notice. Under the interim final rule, revised Sec. 1024.39(d)(3)(iii) gives servicers a 10-day window to provide the required notices at the end of the 180-day period.\14\ This provision will benefit covered persons by modifying the timing requirements for the early intervention notice and providing more than a one-day window. This will benefit servicers by providing additional flexibility in the timing for providing these notices. --------------------------------------------------------------------------- \14\ In particular, revised Sec. 1024.39(d)(3)(iii) would retain the 180-day prohibition but would also specify: (1) If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice, and (2) if a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. --------------------------------------------------------------------------- The interim final rule may have the effect of delaying the date on which some borrowers receive written early intervention information about loss mitigation options. However, this delay in no case exceeds 10 days, and will affect only a limited subset of delinquent borrowers: Those who have invoked their FDCPA cease communication rights and are 45 days or more delinquent at the end of the 180-day period following provision of a prior written early intervention notice. Given that servicers may not be subject to the FDCPA with respect to many of the loans they service and that many borrowers will not choose to invoke the FDCPA's cease communication rights, the Bureau expects that the number of affected borrowers is small.\15\ Given that the delay under the interim final rule is limited and would likely apply to only a small subset of borrowers, the Bureau does not anticipate that the overall effect on consumers will be significant. --------------------------------------------------------------------------- \15\ Borrowers generally have FDCPA protections only with respect to debt collectors. A servicer is not considered a debt collector for purposes of the FDCPA based on acquiring servicing rights to a mortgage loan before the mortgage loan is in default. Therefore, if a servicer obtains servicing rights to a mortgage loan and the borrower subsequently goes into default on that mortgage loan, the servicer generally is not covered by the FDCPA with respect to that mortgage loan based on its servicing of that loan. --------------------------------------------------------------------------- Potential specific impacts of the interim final rule. The Bureau believes that a large fraction of depository institutions and credit unions with $10 billion or less in total assets that are engaged in servicing mortgage loans qualify as ``small servicers'' for purposes of the mortgage servicing rules because they service 5,000 or fewer loans, all of which they or an affiliate own or originated. Small servicers are not subject to Regulation X Sec. 1024.39, and so are not affected by the amendments in this interim final rule. With respect to servicers that are not small servicers as defined in Sec. 1026.41(e)(4), the Bureau believes that the consideration of benefits and costs of covered persons presented above provides a largely accurate analysis of the impacts of the final rule on depository institutions and credit unions with $10 billion or less in total assets that are engaged in servicing mortgage loans. The Bureau has no reason to believe that the additional timing flexibility offered to covered persons by this interim final rule would differentially impact consumers in rural areas. The Bureau requests comment regarding the impact of the amended provisions on consumers in rural areas and how those impacts may differ from those experienced by consumers generally. VIII. Regulatory Flexibility Act Analysis Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.\16\ --------------------------------------------------------------------------- \16\ 5 U.S.C. 603(a), 604(a). --------------------------------------------------------------------------- IX. Paperwork Reduction Act Under the Paperwork Reduction Act of 1995 (PRA),\17\ Federal agencies are generally required to seek Office of Management and Budget (OMB) approval for information collection requirements prior to implementation. The collections of information related to the 2016 Mortgage Servicing Final Rule have been reviewed and approved by OMB previously in accordance with the PRA and assigned OMB Control Numbers 3170-0016 (Regulation X) and 3170-0015 (Regulation Z). Under the PRA, the Bureau may not conduct or sponsor and, notwithstanding any other provision of law, a person is not required to respond to an information collection unless the information collection displays a valid control number assigned by OMB. --------------------------------------------------------------------------- \17\ 44 U.S.C. 3501 et seq. --------------------------------------------------------------------------- The Bureau has determined that the interim final rule will provide firms with additional flexibility and clarity with respect to what must be disclosed under the 2016 Mortgage Servicing Final Rule; therefore, it will have only minimal impact on the industry-wide aggregate PRA burden relative to the baseline. The Bureau welcomes comments on this determination or any other aspects of this interim final rule for purposes of the PRA. Comments should be submitted to the Bureau as instructed in the ADDRESSES part of this document and to the attention of the Paperwork Reduction Act Officer. All comments will become a matter of public record. List of Subjects in 12 CFR Part 1024 Condominiums, Consumer protection, Housing, Insurance, Mortgages, Mortgagees, Mortgage servicing, Reporting and recordkeeping requirements. Authority and Issuance For the reasons set forth in the preamble, the Consumer Financial Protection Bureau amends 12 CFR part 1024 as follows: PART 1024--REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X) 0 1. The authority citation for part 1024 continues to read as follows: Authority: 12 U.S.C. 2603-2605, 2607, 2609, 2617, 5512, 5532, 5581. Subpart C--Mortgage Servicing 0 2. Amend Sec. 1024.39 by revising paragraph (d)(3)(iii) to read as follows: Sec. 1024.39 Early intervention requirements for certain borrowers. * * * * * (d) * * * (3) * * * (iii) A servicer is prohibited from providing the written notice more than once during any 180-day period. If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer [[Page 47958]] must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. Dated: October 2, 2017. Richard Cordray, Director, Bureau of Consumer Financial Protection. [FR Doc. 2017-21912 Filed 10-13-17; 8:45 am] BILLING CODE 4810-AM-P
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Rules and Regulations Federal Register
Vol. 82, No. 198
Monday, October 16, 2017
This section of the FEDERAL REGISTER Instructions: All submissions should the Bureau is issuing this interim final
contains regulatory documents having general include the agency name and docket rule to address the provision in
applicability and legal effect, most of which number or Regulatory Information Regulation X, which would otherwise
are keyed to and codified in the Code of Number (RIN) for this rulemaking. become effective October 19, 2017.2
Federal Regulations, which is published under Because paper mail in the Washington, Among other things, the 2016
50 titles pursuant to 44 U.S.C. 1510.
DC area and at the Bureau is subject to Mortgage Servicing Final Rule addresses
The Code of Federal Regulations is sold by delay, commenters are encouraged to Regulation X’s provision regarding early
the Superintendent of Documents. submit comments electronically. In intervention requirements when a
general, all comments received will be borrower has invoked the cease
posted without change to http:// communication right under the
BUREAU OF CONSUMER FINANCIAL www.regulations.gov. In addition, FDCPA.3 Under that provision (and
PROTECTION comments will be available for public with certain exceptions not applicable
inspection and copying at 1700 G Street here), a servicer subject to the FDCPA
12 CFR Part 1024 NW., Washington, DC 20552, on official with respect to that borrower’s loan
[Docket No. CFPB–2017–0031] business days between the hours of 10 must provide a modified written early
a.m. and 5:00 p.m. Eastern Time. You intervention notice to that borrower on
RIN 3170–AA77
can make an appointment to inspect the a periodic basis but is prohibited from
Mortgage Servicing Rules Under the documents by telephoning 202–435– doing so more than once during any
Real Estate Settlement Procedures Act 7275. 180-day period.
(Regulation X) All comments, including attachments Based on feedback received through
and other supporting materials, will its efforts to support industry
AGENCY: Bureau of Consumer Financial become part of the public record and implementation of the 2016 Mortgage
Protection. subject to public disclosure. Sensitive Servicing Final Rule, the Bureau
ACTION: Interim final rule with request personal information, such as account understands that there is concern among
for public comment. numbers or Social Security numbers, some servicers that this 180-day
should not be included. Comments will prohibition in § 1024.39(d)(3)(iii), read
SUMMARY: The Bureau of Consumer not be edited to remove any identifying in conjunction with the early
Financial Protection (Bureau) is issuing or contact information. intervention provision’s other timing
an interim final rule amending a FOR FURTHER INFORMATION CONTACT: Joel requirements regarding written notices,
provision of the Regulation X mortgage L. Singerman, Counsel; or William R. requires servicers to provide the notice
servicing rules issued in 2016 relating to Corbett or Laura A. Johnson, Senior exactly on the 180th day after providing
the timing for servicers to provide Counsels, Office of Regulations, at 202– a prior notice. The Bureau did not
modified written early intervention 435–7700 or https:// intend this result and is concerned that
notices to borrowers who have invoked reginquiries.consumerfinance.gov/. the provision imposes too narrow a
their cease communication rights under window for compliance and may
SUPPLEMENTARY INFORMATION:
the Fair Debt Collection Practices Act. provide insufficient guidance as to
The Bureau requests public comment on I. Summary of the Interim Final Rule when and how servicers comply with
this interim final rule. On August 4, 2016, the Bureau issued the timing requirements under certain
DATES: This interim final rule is the Amendments to the 2013 Mortgage circumstances. Thus (and as explained
effective on October 19, 2017. Rules Under the Real Estate Settlement in further detail below), the Bureau is
Comments must be received on or Procedures Act (Regulation X) and the issuing this interim final rule to amend
before November 15, 2017. Truth in Lending Act (Regulation Z) § 1024.39(d)(3)(iii) to give servicers a 10-
ADDRESSES: You may submit comments, (2016 Mortgage Servicing Final Rule) day window to provide the modified
identified by Docket No. CFPB–2017– amending certain of the Bureau’s notice at the end of the 180-day period.
0031 or RIN 3170–AA77, by any of the mortgage servicing rules.1 The Bureau The Bureau believes that the interim
following methods: has learned, through its outreach in final rule provides clearer and more
• Email: FederalRegisterComments@ support of industry’s implementation of flexible standards than the timing
cfpb.gov. Include Docket No. CFPB– the 2016 Mortgage Servicing Final Rule, requirements adopted in the 2016
2017–0031 or RIN 3170–AA77 in the that certain technical aspects of the rule Mortgage Servicing Final Rule, offering
subject line of the email. relating to the timing for servicers to greater certainty for implementation and
• Federal eRulemaking Portal: http:// provide modified written early compliance, without undermining
www.regulations.gov. Follow the intervention notices to borrowers who important borrower protections relating
instructions for submitting comments. have invoked their cease
• Mail: Monica Jackson, Office of the communication rights under the Fair 2 The Bureau is addressing in a separate proposed
Executive Secretary, Consumer rule another disclosure timing provision of the 2016
Debt Collection Practices Act (FDCPA)
jstallworth on DSKBBY8HB2PROD with RULES
Mortgage Servicing Final Rule that would otherwise
Financial Protection Bureau, 1700 G may create unintended challenges in become effective April 19, 2018.
Street NW., Washington, DC 20552. implementation. To alleviate any 3 The provisions of Regulation X discussed herein
• Hand Delivery/Courier: Monica unintended challenges and facilitate were amended by the 2016 Mortgage Servicing
Jackson, Office of the Executive timely provision of written early Final Rule but are not effective until October 19,
2017. To simplify review of this document and
Secretary, Consumer Financial intervention notices to these borrowers, differentiate between those amendments and this
Protection Bureau, 1700 G Street NW., rule, this document generally refers to the 2016
Washington, DC 20552. 1 81 FR 72160 (Oct. 19, 2016). amendments as though they already are in effect.
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![47958 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Rules and Regulations
must provide the written notice again Express Bridge Pilot, which is designed (8) Loans under the Express Bridge
no later than 45 days after the payment to supplement the Agency’s disaster Pilot in a particular disaster area can
due date for which the borrower response capabilities. The Express only be made up to six months after the
remains delinquent or 190 days after the Bridge Pilot will authorize the Agency’s date of the applicable Presidential
provision of the prior written notice, 7(a) Lenders with SBA Express lending disaster declaration.
whichever is later. authority to deliver expedited SBA- (9) The Express Bridge Pilot will be
Dated: October 2, 2017. guaranteed financing on an emergency available for use starting October 16,
Richard Cordray,
basis for disaster-related purposes to 2017, and will expire on September 30,
small businesses located in these 2020. Express Bridge Pilot loans must be
Director, Bureau of Consumer Financial
Protection.
communities while the businesses apply approved on or before such date, as
for and await long-term financing evidenced by the issuance of an SBA
[FR Doc. 2017–21912 Filed 10–13–17; 8:45 am]
(including through SBA’s direct disaster loan number.
BILLING CODE 4810–AM–P
loan program, if eligible). To maximize the effectiveness of the
The Express Bridge Pilot will apply Express Bridge Pilot, SBA is modifying
the policies and procedures in place for an Agency regulation (13 CFR 120.150)
SMALL BUSINESS ADMINISTRATION the Agency’s SBA Express program, that applies to loans made in the 7(a)
except as outlined in this document, Business Loan Program. (SBA uses the
13 CFR Part 120
and include the following: term ‘‘modify’’ as contemplated under
Express Bridge Loan Pilot Program; (1) The maximum loan amount under 13 CFR 120.3.) This modification will
Modification of Lending Criteria the pilot is $25,000 and the loans will also minimize the burdens on the
carry a 50 percent guaranty from the businesses applying for loans through
AGENCY: U.S. Small Business Agency. the Express Bridge Pilot and expand the
Administration. (2) Express Bridge Pilot loans in a opportunities for SBA Express lenders
ACTION: Notification of Express Bridge particular disaster area can only be to participate in the pilot.
Loan Pilot Program and impact on made by SBA Express lenders that were Under § 120.150 of SBA’s regulations,
regulatory provision. participants in the SBA Express a small business applicant must be
program as of the date of the applicable creditworthy and loans must be so
SUMMARY: The U.S. Small Business disaster. sound as to reasonably assure
Administration (SBA) announces SBA’s (3) Eligible small businesses are those repayment. In making this
Express Bridge Loan Pilot Program that were located, as of the date of the determination, character, reputation,
(Express Bridge Pilot), as described in applicable disaster, in the counties that credit history of the applicant and
this document, and its impact on an have been Presidentially-declared as guarantors, past earnings, projected cash
Agency regulation relating to loan disaster areas, plus any contiguous flow, and future prospects, among other
underwriting for loans made under the counties. things, must be considered. Currently,
Express Bridge Pilot. This pilot will (4) SBA Express lenders may make SBA Express lenders are authorized to
provide expedited guaranteed bridge loans under the Express Bridge Pilot make the credit decision using credit
loan financing for disaster-related only to eligible small businesses that analysis processes and procedures
purposes to small businesses located in had an existing banking relationship (which may include credit scoring) that
communities impacted by a with the SBA Express lender as of the are consistent with those used for their
Presidentially-declared disaster, while date of the applicable disaster. A similarly-sized non-SBA guaranteed
those small businesses apply for and relationship with any of the SBA commercial loans.
await long-term financing (including Express lender’s affiliates will not In order to streamline the loan
through SBA’s direct disaster loan satisfy this requirement. underwriting process for the Express
program, if eligible). The modification Bridge Pilot, SBA is modifying the
(5) SBA Express lenders must certify
of the lending criteria will minimize the requirements of 13 CFR 120.150 to
to SBA, for each Express Bridge Pilot
burden on businesses applying for loans allow SBA Express lenders to
loan, that the loan funds will be used to
through the Express Bridge Pilot and underwrite Express Bridge Pilot loans
support the survival and/or reopening of
provide an incentive for SBA Express by considering only the following:
the small business within the affected
lenders to participate in the pilot. (1) A minimum acceptable credit
counties.
DATES: The Express Bridge Pilot, (6) The maximum maturity for an score of 130 for the applicant issued by
including the modification of lending Express Bridge Pilot loan is seven years. E-Tran upon submission of the loan
criteria under 13 CFR 120.150, will be The SBA Express lender may require a application for screening;
available from October 16, 2017, borrower to pay down or pay off the (2) a personal credit score for each
through September 30, 2020. Express Bridge Pilot loan if the borrower guarantor; and
FOR FURTHER INFORMATION CONTACT: is approved for long-term disaster (3) Lender must obtain a signed IRS
Dianna Seaborn, Director, Office of financing (including an SBA direct Form 4506–T and an IRS tax transcript.
Financial Assistance, U.S. Small disaster loan) that allows proceeds to be For businesses in operation prior to the
Business Administration, 409 Third used for Express Bridge Pilot loan disaster but not long enough to have
Street SW., Washington, DC 20416; reimbursement. been required to file a tax return, Lender
Telephone (202) 205–3645; email (7) Express Bridge Pilot loans cannot must provide an alternative to verify
address: dianna.seaborn@sba.gov. be sold in SBA’s secondary market. existence of the business.
jstallworth on DSKBBY8HB2PROD with RULES
SUPPLEMENTARY INFORMATION: Pursuant Express Bridge Pilot loans are intended The screening credit score is a FICO®
to its authority under the Small to be interim loans, thus SBA has Small Business Scoring ServiceSM
Business Act, SBA provides assistance determined pursuant to 13 CFR Score. SBA may adjust the minimum
to small businesses located in the 120.612(a)(3) that the sale of such loans acceptable credit score up or down from
communities affected by Presidentially- in SBA’s secondary market would not time to time during the pilot, and will
declared disasters. The Agency has be conducive to the successful operation post any such adjusted score on its Web
announced an initiative called the of the secondary market program. site at www.sba.gov/for-lenders.
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Document Created: 2017-10-14 01:42:48
Document Modified: 2017-10-14 01:42:48
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Interim final rule with request for public comment. | |
| Dates | This interim final rule is effective on October 19, 2017. Comments must be received on or before November 15, 2017. | |
| Contact | Joel L. Singerman, Counsel; or William R. Corbett or Laura A. Johnson, Senior Counsels, Office of Regulations, at 202-435-7700 or https://reginquiries.consumerfinance.gov/. | |
| FR Citation | 82 FR 47953 | |
| RIN Number | 3170-AA77 | |
| CFR Associated | Condominiums; Consumer Protection; Housing; Insurance; Mortgages; Mortgagees; Mortgage Servicing and Reporting and Recordkeeping Requirements |
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