Small Servicer Proposed Rule

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  • #3377

    Jack mentioned a proposed rule last week that will allow banks who otherwise qualify for the small servicer exemption to still meet the requirements if you service charitably. I read the proposal, but I have a question:

    We service a very small scholarship loan program funded by an estate, managed by a local attorney. Apparently he pays us a small ($2k or so) one time annual fee. We do not charge anything on the actual loan. If we forfeit this fee, under the proposed rule, would we still qualify for the small servicer exemption? I am confused about what “charitable” means. Does that refer to a charitable organization, or does that mean that you don’t charge to service? Either way, this particular instance could be tricky.


    The proposal states:

    “The Bureau also is proposing to
    exclude from consideration any
    mortgage loan voluntarily serviced by a
    small servicer for a creditor or assignee
    that is not an affiliate of the servicer and
    for which the servicer does not receive
    any compensation or fees (‘‘charitably
    serviced ’’ mortgage loans).”
    Therefore, if this portion of the proposal becomes final, if you don’t receive compensation or fees for the servicing of these loans and you otherwise qualify for the exemption, you wouldn’t be excluded from the exemption based on servicing these loans.

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