Preparing for the New Mortgage Servicing Rules

Transcription

1 ABA BRIEFING PARTICIPANT S GUIDE Preparing for the New Mortgage Servicing Rules Wednesday, September 7, 2016 Eastern Time 2:00 p.m. 4:00 p.m. Central Time 1:00 p.m. 3:00 p.m. Mountain Time 12:00 p.m. 2:00p.m. Pacific Time 11:00 a.m. 1:00 p.m.

2 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET DISCLAIMER This Briefing/Webcast will be recorded with permission and is furnished for informational use only. Neither the speakers, contributors nor ABA is engaged in rendering legal nor other expert professional services, for which outside competent professionals should be sought. All statements and opinions contained herein are the sole opinion of the speakers and subject to change without notice. Receipt of this information constitutes your acceptance of these terms and conditions. COPYRIGHT NOTICE USE OF ACCESS CREDENTIALS 2016 by American Bankers Association. All rights reserved. Each registration entitles one registrant a single connection to the Briefing by Internet and/or telephone from one room where an unlimited number of participants can be present. Providing access credentials to another for their use, using access credentials more than once, or any simultaneous or delayed transmission, broadcast, re-transmission or re-broadcast of this event to additional sites/rooms by any means (including but not limited to the use of telephone conference services or a conference bridge, whether external or owned by the registrant) or recording is a violation of U.S. copyright law and is strictly prohibited. Please call if you have any questions about this resource or ABA membership.

3 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET Table of Contents TABLE OF CONTENTS... II SPEAKER & ABA STAFF LISTING... III SPEAKER BIOGRAPHIES... IV-V PROGRAM OUTLINE... VI CONTINUING EDUCATION CREDITS INFORMATION... VII CPA SIGN-IN/SIGN-OUT SHEET... VIII INSTRUCTIONS FOR RECEIVING CERTIFICATES OF ATTENDANCE... IX PROGRAM INFORMATION... ENCLOSED PLEASE READ ALL ENCLOSED MATERIAL PRIOR TO BRIEFING. THANK YOU. The Evaluation Survey Questionnaire is available online. Please complete and submit the questionnaire at: Thank you for your feedback. II

4 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET Speaker and ABA Staff Listing Moderator Krista Shonk Vice President, Mortgage Finance/ Sr. Regulatory Counsel American Bankers Association (202) Speakers Jason R. Bushby Partner Bradley Arant Boult Cummings LLP One Federal Place th Avenue North Birmingham, AL (205) ABA Briefing/Webcast Staff Cari Hearn Senior Manager (202) Linda M. Shepard Senior Manager (202) American Bankers Association 1120 Connecticut Avenue, NW Washington, DC www. Jonathan R. Kolodziej Associate Bradley Arant Boult Cummings LLP One Federal Place th Avenue North Birmingham, AL (205) III

5 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET KRISTA SHONK (Moderator) Speaker Biography Krista Shonk is Vice President, Mortgage Finance and Senior Regulatory Counsel for the American Bankers Association. She oversees ABA s advocacy on mortgage servicing issues and works on vendor risk management matters. Ms. Shonk is a recognized expert on financial institution regulatory, compliance and policy issues, and has represented the banking industry before federal regulatory agencies and Congressional staff. Prior to joining ABA, She served as Associate General Counsel for Freddie Mac where she advised on statutory and regulatory requirements for new products and new activities and managed regulatory filings for new business initiatives. She also worked on bank regulatory matters during her previous tenure at the ABA and America s Community Bankers. Ms. Shonk earned a B.A. from Bridgewater College and a J.D. from West Virginia University College of Law. She is a member of the Virginia Bar and serves on the President s Advisory Council for Bridgewater College. JASON R. BUSHBY Jason Bushby provides regulatory compliance, enforcement, and litigation assistance to a range of financial services clients across the country. On the compliance and enforcement side, Jason assists numerous clients as they bring their operations into compliance with various obligations imposed on them by the Consumer Financial Protection Bureau (CFPB), including the Mortgage Servicing Final Rules in Regulations X and Z and the TILA-RESPA Integrated Disclosure Rule. He also advises clients on compliance matters related to a host of federal and state regulations, including TILA, RESPA, FCRA, and the Equal Credit Opportunity Act (ECOA). Jason has advised some of the nation s largest financial institutions in all aspects of their CFPB examinations. His work in this area has includes conducting risk assessments, managing and responding to information requests, self-disclosing issues to the CFPB, working with examiners during on-site reviews, and responding to Proposed Action and Request for Response (PARR) letters and other examination reports. Jason also defends financial institutions in investigations and enforcement actions initiated by the CFPB and other regulators. On the litigation side, Jason represents financial services clients in civil litigation throughout the country. Jason has represented companies involved in a wide array of state, federal, and statutory law claims, including claims related to the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), the Truth in Lending Act (TILA), and the Real Estate Settlement Procedures Act (RESPA). Jason is licensed to practice in Alabama, Mississippi, Florida, Kentucky, Texas, and Oklahoma. Jason was listed in Alabama Super Lawyers as a Rising Star in 2014 and 2015 and was recently named to Benchmark Litigation s inaugural Under 40 Hot List. He is active in the Birmingham Bar Association, where he served on the Executive Committee and as the Young Lawyers Section President. IV

6 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET JONATHAN R. KOLODZIEJ Jonathan Kolodziej represents banks, non-banks and other financial service providers in regulatory compliance, enforcement and litigation matters. He helps clients ensure that their operations are in compliance with federal consumer financial laws and that they are able to successfully demonstrate their compliance to the Consumer Financial Protection Bureau (CFPB) and other federal and state regulators. In this role, Jonathan helps clients assess the impact of new rules and regulations and adapt to changes in the regulatory environment. Jonathan assists numerous clients on the implementation of significant regulatory changes, including the Mortgage Servicing Final Rules in Regulations X and Z and the TILA-RESPA Integrated Disclosure Rule. He also advises clients on compliance matters related to the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), the Fair Credit Reporting Act (FCRA), the Electronic Fund Transfer Act (EFTA), the Homeowners Protection Act (HPA), and the Equal Credit Opportunity Act (ECOA). Jonathan has also advised some of the nation s largest financial institutions in preparing for and managing their CFPB examinations. His work in this area has included conducting risk assessments, responding to information requests, self-disclosing issues to the CFPB, working with examiners during on-site reviews, and responding to Proposed Action and Request for Response (PARR) letters and supervisory letters. Jonathan has also assisted clients with the development of compliance management systems and with the prevention of unfair, deceptive, or abusive acts or practices (UDAAP). V

7 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET TIMES PROGRAM OUTLINE SESSION AND SPEAKERS 1:45 2:00 p.m. ET Pre-Seminar Countdown 2:00 2:02 p.m. Welcome and Announcements 1Source International 2:02 2:10 p.m. Speaker Introductions and Opening Remarks Krista Shonk American Bankers Association 2:10 2:35 p.m. Overview Requests for Information Definition of Delinquency Force-placed Insurance Prompt Payment Crediting Small Servicers Jason Bushby, Bradley Arant Boult Cummings LLP Jonathan Kolodziej, Bradley Arant Boult Cummings LLP 2:35 2:45 p.m. Questions and Answers 2:45 3:50 p.m. Successors in Interest Early Intervention Loss Mitigation Periodic Billing Statements Effective Dates Next Steps and Implementation Jason Bushby, Bradley Arant Boult Cummings LLP Jonathan Kolodziej, Bradley Arant Boult Cummings LLP 3: 50 4:00 p.m. Questions and Answers Closing Comments VI

8 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET Continuing Education Credits Information The Institute of Certified Bankers (ICB) is dedicated to promoting the highest standards of performance and ethics within the financial services industry. The ABA Briefing/Webcast, Preparing for the New Mortgage Servicing Rules has been reviewed and approved for 2.5 continuing education credits towards the CRCM designation. To claim these continuing education credits, ICB members should visit the Member Services page of the ICB Website at You will need your member ID and password to access your personal information. If you have difficulty accessing the Website and/or do not recall your member ID and password, please contact ICB at or American Bankers Association is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: CPE credit hours (Regulatory Ethics) will be awarded for attending this group-live Briefing/Webcast. Participants eligible to receive CPE credits must sign in and out of the group-live Briefing/Webcast on the CPA Required Sign-in/Sign-out Sheet included in these handout materials. A CPA/CPE Certificate of Attendance Request Form also must be completed online. See enclosed instructions. Continuing Legal Education Credits This ABA Briefing/Webcast is not pre-approved for continuing legal education (CLE) credits. However, it may be possible to work with your state bar to obtain these credits. Many states will approve telephone/ audio programs for CLE credits; some states require proof of attendance and some require application fees. Please contact your state bar for specific requirements and submission instructions. VII

9 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET CPA Required Sign-in/Sign-out Sheet CPAs may receive up to 2.0 hours of Continuing Professional Education (CPE) credit for participating in this group-live Briefing/Webcast. INSTRUCTIONS: 1. Each participating CPA must sign-in when he/she enters the room and sign-out when he/she leaves the room. 2. Name and signature must be legible for validation of attendance purposes as required by NASBA. 3. Unscheduled breaks must be noted in the space provided. 4. Each participating CPA must complete, online a CPA/CPE Certificate of Completion Request Form (instructions found on page VIII). 5. Individuals who do not complete both forms and submit them to ABA will not receive their Certificate of Completion. This CPE Sign In/Out Sheet must be scanned and uploaded with the CPE / CPA Request for Certificate of Completion form (instructions found on page VIII of this kit) in order for the CPA to receive your Certificate of Completion. FULL NAME (PLEASE PRINT LEGIBLY) SIGNATURE TIME IN TIME OUT UNSCHEDULED BREAKS American Bankers Association is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: Please note: CPE credits are ONLY awarded to those who have listened to the live broadcast of this Briefing/Webcast. VIII

10 American Bankers Association Preparing for the New Mortgage Servicing Rules Wednesday, September 7, :00 4:00 p.m. ET Instructions for Receiving Certificates of Attendance CPA/CPE Certificate of Attendance Submission of a sign-in/sign-out sheet AND electronic request for a certificate of attendance are required for the validation process to be completed. NASBA requires ABA to validate your attendance BEFORE you will receive your certificate of attendance. 1. COMPLETE a CPA / CPE Certificate of Completion Request Form online at: 2. SCAN AND UPLOAD the completed CPE / CPA Required Sign-in/Sign-out Sheet (enclosed) and include it with the REQUEST for CPE/CPA Certificate of Completion form found in Step SUBMIT completed Request Form and Sign-in/out Sheet 4. VALIDATION ABA Briefing Staff will VALIDATE your attendance within 10 days from receipt of Request Form and Sign-in/out Sheet 5. A personalized certificate of completion will be ed to you once your attendance is validated 6. QUESTIONS about your certificate of completion? Contact us at briefingcertificates@. General Certificate of Completion 1. REQUEST a General Certificate of Completion at: 2. A personalized certificate of completion will be ed to you within 10 days of your request. 3. QUESTIONS about your certificate of completion? Contact us at briefingcertificates@. IX

11 Preparing for the New Mortgage Servicing Rules ABA Briefing/Webcast Wednesday, September 7, :00 4:00 p.m. ET Disclaimer This Briefing will be recorded with permission and is furnished for informational use only. Neither the speakers, contributors nor ABA is engaged in rendering legal nor other expert professional services, for which outside competent professionals should be sought. All statements and opinions contained herein are the sole opinion of the speakers and subject to change without notice. Receipt of this information constitutes your acceptance of these terms and conditions. 1

12 Presenters Jason Bushby, Partner, Bradley Arant Boult Cummings LLP Jonathan Kolodziej, Associate, Bradley Arant Boult Cummings LLP Krista Shonk, Vice President, Mortgage Finance & Senior Regulatory Counsel, American Bankers Association (moderator) 3 Agenda Overview Requests for Information Definition of Delinquency Force-placed Insurance Prompt Payment Crediting Small Servicers Successors in Interest Early Intervention Loss Mitigation Periodic Billing Statements Effective Dates Next Steps and Implementation 4 2

13 Overview Final amendments to Regulations X and Z released on August 4, 2016 Amendments cover nine major topics: 1. Requests for Information 2. Definition of Delinquency 3. Force-placed Insurance 4. Prompt Payment Crediting 5. Small Servicers 6. Successors in Interest 7. Early Intervention 8. Loss Mitigation 9. Periodic Billing Statements 5 Requests for Information 6 3

14 Requests for Information When a borrower submits a request for information related to the owner/assignee of a loan that is held in trust, the servicer must provide information related to trust and trustee If Fannie/Freddie is the owner or trustee, and the request does not expressly request the name or number of the trust or pool, the servicer only has to provide the name of Fannie/Freddie 7 Definition of Delinquency 8 4

15 Definition of Delinquency Delinquency begins on the day a payment sufficient to cover principal, interest, and, if applicable, escrow for a given billing cycle is due and unpaid, even if the borrower is afforded a period after the due date to pay before being assessed a late fee Definition limited to sections and A borrower and a borrower s mortgage loan obligation are delinquent beginning on the date a periodic payment sufficient to cover principal, interest, and, if applicable, escrow becomes due and unpaid, until such time as no periodic payment is due an unpaid Definition applies to the mortgage servicing subpart of Regulation X (subpart C) and Adds discretionary payment tolerance 9 Force-Placed Insurance 10 5

16 Force-Placed Insurance Requisite initial and reminder force-placed insurance notices do not contemplate instances when a borrower has insufficient coverage Force-placed insurance notices arguably cannot include account number Initial and reminder notices contemplate insufficient coverage Force-placed insurance notices may include account number 11 Prompt Payment Crediting 12 6

17 Prompt Payment Crediting Informal guidance suggested that trial modification payments should be held in suspense until amount sufficient to cover a regular periodic payment is received Temporary Loss Mitigation A periodic payment is amount sufficient to cover principal, interest and escrow under the original loan contract, regardless of payment due under temporary loss mitigation program Permanent Loan Modification A periodic payment is amount sufficient to cover principal, interest and escrow under modified contract 13 Small Servicer 14 7

18 Small Servicer In making small servicer determination, can exclude: Loans voluntarily serviced for a creditor or assignee that is not an affiliate of the servicer, and for which the servicer does not receive any compensation In making small servicer determination, can exclude: Loans voluntarily serviced for a non-affiliate of the servicer, and for which the servicer does not receive any compensation Transactions serviced for a seller financer that satisfies all criteria in (a)(5) 15 How to Submit Questions If you are participating on the Web: Enter your Question in the Questions Box and Press ENTER / SUBMIT If you are participating by Phone: your question to: aba@1source-intl.net 16 8

19 Successors in Interest 17 Successors in Interest Servicer is required to maintain P&Ps reasonably designed to, upon notification of the death of a borrower, promptly identify and facilitate communication with the successor in interest of the deceased borrower CFPB Bulletin Implementation Guidance Three components: Definition of successor in interest Confirmation process; and Once confirmed, successors in interest must be considered borrowers for purposes of servicing rules 18 9

20 Successors in Interest Definition (cont.) Successor in interest Means a person to whom an ownership interest in a property securing a mortgage loan is transferred Covered transfers: Transfers by devise, descent or operation of law on the death of a joint tenant or tenant by the entirety Transfers to a relative resulting from a borrower s death Transfers where the spouse or children of the borrower become an owner Transfers to a spouse resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement Transfers into an inter vivos trust in which the borrower is and remains a beneficiary 19 Successors in Interest Confirmation Process Policies and Procedures (cont.) Policies and procedures must be reasonably designed to: Upon receiving notice of the existence of a potential successor in interest, promptly: o Facilitate communication with any potential or confirmed successors in interest; o Determine the documents reasonably required to confirm the potential successor in interest s identity and ownership interest; and o Communicate the requirements to the potential successor in interest Upon receipt of documents from a potential successor, promptly make a determination and notify the person either that additional documents are required, individual is confirmed, or individual is not a successor 20 10

21 Successors in Interest Confirmation Process Requests for Information (cont.) If a request indicates that a person may be a potential successor in interest scenario, the servicer must respond with: Either: o A description of the documents required, or o Examples of documents typically accepted and the additional information needed to identify documents actually required, and Contact information (including telephone number) for further assistance Upon receipt of additional information (verbally or in writing), servicer must treat as new request Servicers are not required to provide any other information All timelines and requirements of apply 21 Successors in Interest Successor = Borrower (cont.) A confirmed successor in interest shall be considered a borrower and receive the same protections as borrowers under the servicing rules (Regulations X and Z) CFPB recognizes that certain language in borrower correspondence could confuse a successor in interest CFPB provides three options to minimize risk: Alter all letters Add affirmative disclosure Notice and acknowledgment form Servicer only required to send correspondence to one borrower/successor 22 11

22 Successors in Interest Successor = Borrower (cont.) Requests for information Servicer s response can omit location, contact, and personal financial information of a borrower or successor Loss Mitigation May not condition evaluation on assumption of the loan, but may condition an offer on assumption of the loan Not required but may review and evaluate applications received from potential successors in interest If a servicer chooses not to review/evaluate an application received from a potential successor in interest, the application must be preserved and the servicer must review/evaluate upon confirmation of the successor in interest 23 Early Intervention 24 12

23 Early Intervention Bankruptcy and FDCPA Exemptions Servicer is exempt from the early intervention live contact and written notice requirements while a borrower is a debtor in bankruptcy Servicer is also exempt when a borrower has provided an FDCPA cease communication request Borrowers in bankruptcy Servicer is exempt from the early intervention live contact requirements Servicer is exempt from the written notice only if: o Loss mitigation options are not available; or o Borrower has provided an FDCPA cease communication request 25 Early Intervention Bankruptcy and FDCPA Exemptions (cont.) Written Notice for borrowers in bankruptcy If a borrower is delinquent when he/she becomes a debtor in bankruptcy, the servicer must send a notice not later than the 45 th day after borrower files petition If a borrower is not delinquent when he/she becomes a debtor in bankruptcy but subsequently becomes delinquent after filing a bankruptcy petition, the servicer must send a notice not later than the 45 th day of delinquency Notice may not contain a request for payment Only has to be sent once during the bankruptcy case 26 13

24 Early Intervention Bankruptcy and FDCPA Exemptions (cont.) Borrowers who have provided an FDCPA cease communication request Servicer is exempt from the early intervention live contact requirements Servicer is exempt from the written notice only if: o Loss mitigation options are not available; or o The borrower is a debtor in bankruptcy Written notice for accounts that have submitted an FDCPA cease communication request Must include statement that servicer may or intends to invoke remedy of foreclosure (model clauses provided) May not include request for payment Prohibited from providing more than once during any 180-day period 27 Loss Mitigation 28 14

25 Loss Mitigation Duplicative Requests Servicer only required to comply with loss mitigation requirements of for single complete loss mitigation application on account Servicer must comply with loss mitigation requirements of for all loss mitigation applications, unless servicer has previously done so for a complete application and borrower has been delinquent at all times since submitting prior complete application 29 Loss Mitigation Short-Term Repayment Plans Ambiguous as to whether short-term repayment plans can be offered based on incomplete applications Short term repayment plan: Allows for the repayment of no more than 3 months of past due payments over a period lasting no more than 6 months Can be offered based on incomplete applications 30 15

26 Loss Mitigation Short-Term Repayment Plans (cont.) Within 5 business days of offering a short-term option (repayment or forbearance) based on an incomplete application, a servicer must provide a notice stating, among other things, the specific payment terms and the duration of the program When offering short-term repayment plans based on incomplete applications, servicer must comply with all other loss mitigation requirements in (acknowledgment, evaluation of complete applications, etc.) 31 Loss Mitigation Notice of Complete Applications Notice that application is complete not expressly required, unless part of acknowledgment letter Within 5 business days of receipt of a complete application, a servicer must provide a written notice to the borrower (subject to certain exceptions) with certain requisite information 32 16

27 Loss Mitigation Missing 3 rd Party Documents No exception to the requirement to evaluate a complete loss mitigation application within 30 days of receipt Generally prohibited from denying a complete application solely because the servicer lacks necessary 3 rd party documents Within the 30-day evaluation period (or shortly thereafter), must send a notice with requisite content Upon receipt of missing 3 rd party information, must promptly evaluate the application and provide evaluation notice 33 Loss Mitigation Servicing Transfers A servicer that obtains the servicing of a mortgage loan for which an evaluation of a complete loss mitigation application is in process should continue the evaluation to the extent practicable Generally, if a transferee servicer acquires servicing rights to a loan for which a loss mitigation application is pending as of the transfer date, the transferee must comply with the loss mitigation requirements within the timeframes that were applicable to the transferor based on the date the transferor received the application Any rights/protections related to the evaluation, appeal, and dual tracking to which a borrower was entitled before the transfer continue to apply (notwithstanding the transfer) 34 17

28 Loss Mitigation Servicing Transfers (cont.) If a transferee servicer acquires loan for which the transferor has not provided an acknowledgment letter, and the time in which to do so has not expired as of the transfer date, the transferee must provide an acknowledgment notice within 10 business days of the transfer date Unique dual tracking restrictions are applicable here If a transferee servicer acquires loan for which a complete application is pending as of the transfer date, the transferee has to evaluate the application and provide an evaluation notice to the borrower within 30 days of the transfer date 35 Loss Mitigation Servicing Transfers (cont.) If a transferee servicer acquires loan for which an appeal has not been resolved or an appeal is timely filed after transfer, the transferee must make a determination on the appeal if able or, if unable, must treat the appeal as a pending complete loss mitigation application For appeals that have not been resolved as of the transfer date, must provide an appeal determination within 30 days of the transfer date For appeals timely filed after the transfer, must provide an appeal determination within 30 days after receipt of the appeal If a transferee servicer acquires loan in which the transferor made a loss mitigation offer and the time for the borrower to accept the offer has not expired, must permit the borrower to accept offer 36 18

29 Loss Mitigation Reasonable Date Requires that an acknowledgment letter include a reasonable date by which the borrower should submit missing documents Servicer should select the deadline that preserves the maximum borrower rights based on certain milestones Acknowledgment letter must include reasonable date 30 days is generally reasonable BUT: must consider milestones If one of the milestones is within the 30-day period, provide the next milestone date BUT: date must never be less than 7 days 37 Loss Mitigation Borrower Preference Informal guidance suggested that servicer/investor can generally deny loss mitigation options based on a borrower s preference and, in turn, not collect documents related to option(s) in which borrower has not expressed interest Servicer may not stop collecting documents/information for any loss mitigation option based solely upon a borrower s stated preference May stop collecting documents/information based upon a borrower s stated preference in conjunction with other information, as prescribed by any requirements established by the owner or assignee 38 19

30 Periodic Billing Statements 39 Periodic Billing Statements Close Proximity Items in close proximity may not have any intervening text between them Items in close proximity may not have any unrelated text between them 40 20

31 Periodic Billing Statements Acceleration Disclosures must reflect the legal obligation between the parties If an account is accelerated, the Amount Due should reflect the full outstanding balance Amount Due If servicer will accept a lesser amount to reinstate the loan, the lesser amount must be reflected Explanation of Amount Due If servicer will accept a lesser amount to reinstate the loan, both the reinstatement amount and accelerated amount must be reflected 41 Periodic Billing Statements Loss Mitigation Informal guidance: Amount Due Could reflect trial payment amount under a loss mitigation agreement, and Explanation of Amount Due Could explain the difference between trial payment and regular monthly payment amount Temporary loss mitigation program: Amount Due Can reflect either the payment due under the program, or the amount due according to loan contract Explanation of Amount Due If Amount Due reflects the amount due under the temporary program, this section must reflect both amounts (contractual payment and amount under the program) Permanent loan modification: Statement should reflect amounts due pursuant to modified contract 42 21

32 Periodic Billing Statements Charged Off Loans No exception to billing statement requirements for loans that have been charged off Billing statements are not required for charged off loans if: Servicer will not charge additional fees or interest on the account; and An initial/lone billing statement is provided to the borrower containing certain requisite information 43 Periodic Billing Statements Bankruptcy Borrowers in active bankruptcy and those who have received a discharge are exempt from the billing statement requirements Generally requires periodic billing statements to be sent to consumers in bankruptcy, subject to certain exemptions, and with modified content depending on the type of bankruptcy Provides sample forms for borrowers in a Chapter 7 or 11 bankruptcy, and for borrowers in a Chapter 12 or 13 case 44 22

33 Periodic Billing Statements Bankruptcy (cont.) Modified billing statement requirements don t apply for a consumer in bankruptcy if any of the following apply: The consumer requests in writing that the servicer cease sending statements (or coupon books); The consumer s bankruptcy plan provides for a surrender of the dwelling, the avoidance of the lien, or otherwise does not provide for payment of pre-bankruptcy arrearage or maintenance of payments due; A court enters an order providing for the avoidance of the lien, lifting the automatic stay with regard to the dwelling, or requiring the servicer to cease providing statements; or The consumer files with the court a statement of intention identifying an intent to surrender the dwelling and has not made any payments on the loan after the commencement of the bankruptcy case 45 Periodic Billing Statements Bankruptcy (cont.) Exemption from statement requirement no longer applies if: The consumer reaffirms personal liability for the loan; or The consumer requests in writing that statements be provided (subject to court order restricting/preventing statements) Designated address may be established for requests for statements, and requests to cease sending statements When transitioning to, or from, a modified periodic statement, if the next billing cycle due date is within 14 days of the triggering event, then the servicer is exempt from the statement requirements for one cycle Statements must resume within a reasonably prompt time after the next billing cycle 46 23

34 Periodic Billing Statements Bankruptcy (cont.) Content requirements are modified for borrowers in bankruptcy Specific content adjustments for Chapter 12 and 13 statements Permits terminology adjustments as necessary 47 Periodic Billing Statements Bankruptcy Required bankruptcy messages: Terminology adjustments: Non bankruptcy: Bankruptcy: 48 24

35 Effective Dates 18 months from date published in Federal Register for provisions related to: Successors in interest; and Periodic billing statements for borrowers in bankruptcy 12 months from date published in Federal Register for all other provisions 49 Next Steps and Implementation Start now begin change management process and educate affected departments Begin technology discussions and improvements Implement on rolling basis as permitted Stay on top of CFPB guidance 50 25

36 How to Submit Questions If you are participating on the Web: Enter your Question in the Questions Box and Press ENTER / SUBMIT If you are participating by Phone: your question to: aba@1source-intl.net 51 26

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