Appendix A ABA Staff Analysis: Servicing At-A-Glance

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1 Appendix A ABA Staff Analysis: Servicing At-A-Glance Requirement Covered Products Are Small Servicers ARM Disclosures ( (c) (d)) Closed-end first and second liens secured by consumer s principal dwelling ( (c)(1)(i) and (d)(1)(i)) Exemption ARMs with terms of one year or less The first interest rate adjustment to an ARM if the first payment at the adjusted level is due within 210 days after consummation and the new interest rate disclosed at consummation was not an estimate ( (c)(1)(ii)) Prompt Crediting and Payoff Statements ( ) For payment processing and late fees, closed-end first and second liens secured by a consumer s principal dwelling ( (b) and Comment 36(b)-1) For payoff statements, open-end and closed-end first and second liens secured by a dwelling ( (b) and Comment 36(b)-1) 2 1 Small Servicers are exempt from specified parts of the CFPB s new mortgage servicing rules. This is not a complete exemption. To qualify for the Small Servicer exemption, a servicer must service 5,000 or fewer mortgage loans, all of which the servicer (or an affiliate) owns or originated. Servicers that sell mortgage loans into the secondary market servicing retained are not disqualified from eligibility for the Small Servicer exemption. Small Servicers should be aware of two important limitations on the Small Servicer exemption. First, a servicer that owns mortgage servicing rights for mortgage loans that are not owned by the servicer or an affiliate, or for which the servicer or an affiliate was not the entity to whom the obligation was initially payable, is not a Small Servicer. Second, both a master servicer and a subservicer must meet the requirements of a Small Servicer. For example, if a master servicer meets the definition of a Small Servicer, but retains a subservicer that does not meet the definition of a small servicer, the subservicer is not a Small Servicer for the purposes of determining any exemption, and must comply with the requirements of a servicer. Loans obtained by merger or acquisition will be considered mortgage loans for which the servicer or an affiliate is the creditor to which the mortgage loan is initially payable. (12 CFR (e)(4) and corresponding CFPB commentary). 2 CFPB amended the scope of the Prompt Crediting and Payoff Statement requirement in 78 Fed. Reg (October 1, 2013). 1

2 Periodic Statements ( ) Escrow Accounts & Force-Place Insurance ( (k)) Closed-end first and second liens secured by a dwelling Exemptions ( (e)) Reverse mortgage transactions Timeshare plans The periodic statement requirement generally does not apply to fixed-rate loans if the servicer provides a coupon book, so long as the coupon book contains certain information specified in the rule and the other information specified in the rule is made available to the consumer upon request. Certain carve outs for electronic communications Federally-related mortgage loans = first and subordinate liens ( (a) and (b)) HELOCS are covered (See 78 Fed. Reg (February 14, 2013)), such as construction loans Partial Exemption Small Servicers may purchase force-placed insurance and charge the cost of such insurance to the borrower if the cost of that insurance to the borrower is less than the amount that the Small Servicer would need to disburse from the borrower s escrow account. Other requirements for force-place insurance in do apply to Small Servicers. Servicing Transfers ( ) Servicing Disclosure Statement. The requirement to provide a servicing disclosure statement 3 days after a borrower makes a loan application is limited to first liens ( (a), (a) and (c)(1)). 78 Fed. Reg (February 14, 2013) states that 2

3 applicants for both reverse and forward mortgage loans must receive the servicing disclosure statement. Servicing Transfer tice. Applies to federally related mortgage loans BUT NOT HELOC s ( (b), (a), , 3 Timely Escrow Payments and Treatment of Escrow Account Balances ( ) Error Resolution Procedures ( ) Applies to federally related mortgage loans BUT NOT HELOC S ( (a), (a), , Applies to federally related mortgage loans BUT NOT HELOC s ( (a), (a), ,, such as construction loans 3 CFPB does not believe that it is necessary or appropriate at this time to apply the requirements in 1024, subpart C to open-end credit (home equity lines). 78 Fed. Reg (February 14, 2013). 3

4 Information Requests ( ) Force-placed Insurance ( ) General Servicing Policies, Procedures, and Requirements ( ) Applies to federally related mortgage loans BUT NOT HELOC s ( (a), ,, such as construction loans Applies to federally related mortgage loans BUT NOT HELOCs ( (a), , Applies to federally related mortgage loans BUT NOT HELOC s ( (a), ,. But see partial Small Servicer exemption in , Escrow Accounts. 4

5 Servicers of mortgage loans for which the servicers are also qualified lenders under the Servicers of reverse mortgages, as defined in Early Intervention Requirements For Certain Borrowers ( ) Continuity of Contact ( ) Applies to federally related mortgage loans BUT NOT HELOC s ( (a), , Limited to principal residences ( (c)(2)) Servicers of mortgage loans for which the servicers are also qualified lenders under the Servicers of reverse mortgages, as defined in Applies to federally related mortgage loans BUT NOT HELOC s ( (a), , Limited to principal residences ( (c)(2)) 5

6 Servicers of mortgage loans for which the servicers are also qualified lenders under the Servicers of reverse mortgages, as defined in Loss Mitigation Options ( ) Applies to federally related mortgage loans BUT NOT HELOC s ( (a), , Limited to principal residences ( (c)(2)) Servicers of mortgage loans for which the servicers are also qualified lenders under the Servicers of reverse mortgages, as defined in Partial Exemption Small servicers must comply with two of the loss mitigation requirements: (1) a small servicer may not make the first notice or filing required for a foreclosure process unless a borrower is more than 120 days delinquent, and (2) a small servicer may not proceed to foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of a loss mitigation agreement. 6