New Consumer Financial Protection Bureau (CFPB) Regulations
Mortgage servicers must comply with CFPB regulations for loss mitigation applications for first or second trust closed-end loans submitted on or after January 10, 2014.
- If a mortgage servicer services "5,000 or fewer loans and services only mortgage loans that they or an affiliate originated or own, or is a housing finance agency" then the servicer is considered a "small servicer" and is only subject to CFPB regulations relative to the prohibition on foreclosure before 120 days of delinquency (see below).
- Compliance is only required for a "single complete loss mitigation application for a borrower's mortgage loan account."
- Compliance is only required for complete applications submitted more than 37 days before the foreclosure sale.
- Compliance may not be required if borrower is in active bankruptcy.
- The servicer can foreclose at any time based on the due-on-sale clause.
- The servicer can foreclose at any time if the servicer is "joining a foreclosure of a subordinate lienholder.
CFPB regulations give borrowers the right to sue for defects in the loss mitigation protocol but do NOT entitle borrowers to receive a work out option. Whether a secured party participates in a particular program or offers a particular option is not effected or mandated by these regulations. Borrowers may sue for damages, costs and attorney's fees.
PROTECTION FROM FORECLOSURE
ALL servicers must comply with the CFPB prohibition on taking steps toward foreclosure action when a borrower is less than 120 days in default. This includes:
- "[Ma]king the first notice or filing" required by state law.
- Not moving forward with the foreclosure process or scheduling a sale if the borrower has submitted a complete loss mitigation application.
- Not moving forward with foreclosure sale if the borrower is in compliance with the terms of an offered and accepted loss mitigation program.
In Maryland, this means that the servicer cannot cause the Order to Docket
to be filed (see MD - Foreclosure Resources
for a list of terms and definitions).
In District of Columbia, this means that the servicer cannot send/record the Notice of Default
in DISB mediation cases or file the Complaint to Foreclose
in judicial foreclosure cases (see DC - Foreclosure Resources
for a list of terms and definitions).
Despite the prohibition, the servicer is permitted to continue to litigate, arbitrate and/or mediate.
If a dispositive motion is filed and the borrower submits a complete loss mitigation application, the servicer must make reasonable efforts "to avoid a ruling or issuance of an order" on the motion. If the servicer takes appropriate action and the court still rules on the motion, the servicer will not be liable.
SERVICER OBLIGATIONS AND APPLYING FOR LOSS MITIGATION
IMPORTANT: Servicer obligations begin when the borrower has applied for loss mitigation.The borrower must submit an application AND complete it!
- A borrower has "applied" and is considered as having submitted an application when he/she has provided any oral or written information that would be evaluated as part of a loss mitigation application (not merely an inquiry). Oral or written information = application.
- Once the application has been initiated, the borrower must COMPLETE the application in order to receive the protections detailed below and be reviewed for any loss mitigation option.
- An application is considered complete when the borrower provides all information that the servicer requires from the borrower. If borrower provides all information requested in the acknowledgment letter (see section below) or the acknowledgment letter states that the application is complete, the servicer must consider the application facially complete and continue protection against foreclosure sale. If facially complete, the servicer may, however, request additional documents.
RELEVANT TIME FRAMES FOR APPLICATIONS AND OFFERS
- If no foreclosure sale date is set when a completed application is submitted, the application is treated as if it was received more than 90 days before the sale date.
- : (1) the servicer must review the application for completeness; (2) send the borrower a written acknowledgment that application was received within five (5) business days and specify whether the application is complete; (3) if incomplete, the acknowledgment must specify what additional documents are needed to complete the application and provide a "reasonable" deadline date. The complete application must be reviewed for all available loss mitigation options within 30 days of receipt. Borrower has 14 days to accept/reject any offer.
- : (1) the borrower is not entitled to receive written acknowledgment; and (2) the servicer must "exercise reasonable diligence in obtaining documents and information to complete the application." The complete application must be reviewed for all available loss mitigation options within 30 days of receipt. Borrower has 7 days to accept/reject any offer.
- : The servicer is not required to comply with the CFPB regulations. The servicer is not required to review the complete application within 30 days of receipt.
DENIAL OF LOAN MODIFICATIONS
If denied, the servicer must send written notice containing:
- The specific reason for the denial.
- The owner, investor or guarantor of the borrower's loan (if denial related to investor guidelines).
- The specific requirement that was the basis of the denial (cannot just say "investor guidelines").
- A statement that borrower was denied for other options because he/she qualified for an option in the waterfall (if a waterfall analysis was used for evaluation).
- NPV inputs (if reason for denial involved NPV calculation).
- Any right to appeal the decision (if applicable).
Servicer must exercise "reasonable diligence" in helping borrower to complete the application.
If the servicer is changed while the file is under review, the new servicer must obtain all documents from the old servicer. If the application was complete when it was submitted to the old servicer, then the new servicer must consider it complete as of the date it was submitted to the old servicer.
Borrower are only entitled to appeal a denial if he/she submitted a complete loss mitigation application: (1) 90 days or more before the foreclosure sale; or (2) before any foreclosure sale date is scheduled.
The servicer is permitted to evaluate an incomplete application if: (1) the application has remained incomplete for a "significant period of time"; or (2) if the servicer is only offering short-term assistance.
If borrower does not respond to an offer by the applicable deadline but instead makes the trial payment, the servicer must consider the payment as acceptance of the offer.
NOTICE OF ERROR / REQUEST FOR INFORMATION SERVICER CONTACTS
Pursuant to the new CFPB regulations, borrowers have the right to provide written notice to their servicers that requests information or provides notice of error. Each notice much be sent to the servicer at the proper address in order to ensure timely response.
Errors that a borrower can assert include, but are not limited to, failure to accept or apply payments, failure to credit a payment as of the date it was received, failure to pay escrowed items, imposition of an unreasonable fee, failure to provide an accurate payoff balance, failure to provide accurate loss mitigation and foreclosure information, failure to timely transfer loan information to a new servicer, and dual tracking.
Response time - Notice of Error
A servicer must send written acknowledgment of receipt of the notice within five (5) days of receipt of the notice. The response period does not include weekends or legal holidays.
Payoff amount errors - A servicer must either correct the error or conduct an investigation and provide written notification that there has been no error no later than seven (7) business days (not including weekends or legal holidays).
First foreclosure filing and conducing saleerrors - A servicer must either correct the error or conduct an investigation and provide written notification that there has been no error within the earlier of: 1) 30 days after receipt of the notice; or 2) before the foreclosure sale date.
All other errors - A servicer must either correct the error or conduct an investigation and provide written notification that there has been no error no later than 30 days (not including weekends or legal holidays) of receipt of the notice.
Extension of time - For "all other errors", a servicer may extend the time period for responding by an additional 15 days if, before the end of the 30 day response period, the servicer notifies the borrower of the extension and the reasons for extension in writing.
Response time - Request for Information
A servicer must sent written acknowledgment of receipt of the notice within five (5) days of receipt of the notice. The response period does not include weekends or legal holidays.
Investor information - A servicer must either provide the information requested in writing or conduct an investigation and provide written notification that the requested information is not available to the servicer no later than ten (10) days (not including weekends or legal holidays) after receipt of the notice.
All other requests - A servicer must either provide the information requested in writing or conduct an investigation and provide written notification that the requested information is not available to the servicer no later than 30 days (not including weekends or legal holidays) after receipt of the notice.
Extension of time - For "all other requests", a servicer may extend the time period for
responding by an additional 15 days if, before the end of the 30 day
response period, the servicer notifies the borrower of the extension and
the reasons for extension in writing.
If you need a sample Request for Information letter, click here
If you need a sample Notice of Error letter, click here
Send correspondence to:
Bank of America, N.A.
Attn: Notice of Error and Request for Information
P.O. Box 942019
Simi Valley, CA 93094-2019
Bayview Loan Servicing, LLC
4425 Ponce de Leon Blvd, 5th floor
Coral Gables, FL 33146
BB&T MSCR Department
P.O. Box 3307
Greenville, SC 29602
BSI Financial Services
Attn: Qualified Written Requests
1425 Greenway Drive, Suite 400
Irving, TX 75038
Caliber Home Loans, Inc.
P.O. Box 270415
Oklahoma City, OK 73137
Capital One, N.A.
P.O. Box 21887
Eagan, MN 55121
Carrington Mortgage Services, LLC
P.O. Box 5001
Westfield, IN 46074
P.O. Box 183166
Columbia, OH 43218-3166
Attn: Customer Research Team
P.O. Box 10002
Hagerstown, MD 21747-0002
Ditech (formerly Green Tree)
P.O. Box 6176
Rapid City, SD 57709-6176
Dovenmuehle Mortgage, Inc.
Attn: Mail Stop NOE1290
1 Corporate Drive, Ste. 360
Lake Zurich, IL 60047
P.O. Box 50428
Indianapolis, IN 46250-0401
IndyMac Mortgage Servicing
2900 Esperanza Crossing
Austin, TX 78758
P.O. Box 619098
Dallas, TX 75261-9741
Mortgage Service Center
P.O. Box 830
Bowie, MD 20718
P.O. Box 8887
Dayton, OH 45401-8807
Select Portfolio Servicing (SPS)
P.O. Box 65277
Salt Lake City, UT 84165-0277
Shellpoint Mortgage Servicing
P.O. Box 10826
Greenville, SC 29603-0826
Specialized Loan Servicing LLC
P.O. Box 630147
Littleton, CO 80163-0147
SunTrust Mortgage, Inc.
P.O. Box 26527
Richmond, VA 23261-6527
USAA Federal Savings Bank
P.O. Box 659817
San Antonio, TX 78265-9117
Wells Fargo Home Mortgage
P.O. Box 10335
Des Moines, IA 50306-0335