Summary: CFPB Proposed Rule Re: Mortgage Servicing Rules Under the Truth in Lending Act (Regulation Z)

12 CFR part 1026

NASCUS Legislative & Regulatory Affairs Division
October 2017

The Consumer Financial Protection Bureau (CFPB or Bureau) is proposing amendments to  Regulation Z mortgage servicing rules issued in 2016, which to the timing for servicers to transition to providing modified or unmodified periodic statements and coupon books in connection with a consumer’s bankruptcy case.

Comments must be received by November 17, 2017.  The proposed rule can be found here.

Summary

In August 2016, the Bureau issued amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA)(“2016 Mortgage Servicing Final Rule”). The 2016 Mortgage Servicing Final Rule included technical aspects related to the timing for servicers to provide modified or unmodified periodic statements and coupon books in connection with a consumer’s bankruptcy case.   

The current rule includes a single-billing cycle exemption from the requirement to provide a periodic statement or coupon book in certain circumstances after one of several specific triggering events occurs resulting in a servicer needing to transition to or from providing bankruptcy-specific disclosures.  The single-billing cycle exemption applies only if the payment due date for that billing cycle is no more than 14 days after the triggering event. The final rule also includes specific timing requirements for servicers to provide the next modified or unmodified statement or coupon book after the single-billing cycle exemption has applied. The Bureau has learned that these requirements may create challenges with implementation. 

Therefore, the Bureau is proposing the following revisions to the rule and related commentary:

  • Revise section 1026.41(e)(5)(iv)(B) and (C) and the related commentary to replace the single-billing cycle exemption with a single-statement exemption;
  • Revise section 1026.41(e)(5)(iv)(B) and its related commentary to provide a single-statement exemption for the next periodic statement or coupon book that a servicer would otherwise have to provide, regardless of when in the billing cycle the triggering event occurs;
  • Add new comments 41(e)(5)(iv)(B)-1 through 3 to clarify the operation of the proposed single-statement exemption; and
  • Remove section 1026.41(e)(5)(iv)(C) and related commentary as no longer necessary in light of the changes to Section 1026.41(e)(5)(iv)(B) and its commentary.  

Comments Requested

The Bureau is seeking public comment on the proposed changes noted above.