On August 10 the Consumer Financial Protection Bureau (CFPB) published two significant sets of proposed rules to revise the Truth in Lending (TILA) and the Real Estate Settlement Procedures (RESPA) Acts. Both rules deal with provisions related to the servicing of mortgage loans.
TILA/Regulation Z – The proposed amendments implement the Dodd-Frank Act provisions regarding mortgage loan servicing. Specifically, the proposal implements addresses rules related to:
- Initial rate adjustment notices for adjustable-rate mortgages (ARMs);
- Periodic statements for residential mortgage loans;
- Prompt crediting of mortgage payments and response to requests for payoff amounts; and
- The scope, timing, content, and format of current disclosures to consumers occasioned by the interest rate adjustments of their variable-rate transactions.
The proposal encompasses 177 pages. Comments are due by October 9, 2012. Final rules will be published in January 2013.
RESPA/Regulation X – The proposed amendments implement the Dodd-Frank Act provisions regarding mortgage loan servicing. Specifically, the proposed rule addresses the obligations of a loan servicer to:
- Correct errors asserted by mortgage loan borrowers;
- Provide information requested by mortgage loan borrowers;
- Ensure that a reasonable basis exists to obtain force-placed insurance;
- Establish reasonable information management policies and procedures;
- Provide information about mortgage loss mitigation options to delinquent borrowers;
- Provide delinquent borrowers access to servicer personnel with continuity of contact about the borrower’s mortgage loan account; and
- Evaluate borrowers’ applications for available loss mitigation options.
This proposal revises provisions relating to a mortgage servicer’s obligation to provide disclosures to borrowers in connection with a transfer of mortgage servicing, and a mortgage servicer’s obligation to manage escrow accounts, including the obligation to advance funds to an escrow account to maintain insurance coverage and to return amounts in an escrow account to a borrower upon payment in full of a mortgage loan.
The proposal encompasses 249 pages. Comments are due by October 9, 2012. Final rules will be published in January 2013.