Regulatory Compliance Update March 2017

Regulatory Compliance Update

By: Hickman Beckner, Vice President

The regulatory agencies have slowed the release of new regulations. Most of the regulatory activity were updates and clarifications to existing regulations.

CFPB – Changes to RESPA – Real Estate Settlement Procedures

Delinquency – The CFPB has codified the definition of delinquency. Delinquency is defined as the period of time during which the borrower and the mortgage loan obligation are delinquent. This provides an industry-wide generally applicable definition of delinquency. No changes are required by Shaw.

Borrowers in Bankruptcy – The servicer is exempt from the written notice requirement if no loss mitigation option is available or the borrower has provided a “cease communications” notice under the Fair Debt Collections Practices Act. This means that statements may be sent to a borrower that has declared bankruptcy. Shaw will be making the changes necessary to produce statements with the correct wording for borrowers in bankruptcy.

Other changes –

Notices for Hazard Insurance Expiration – wording changes
Reminder Notice for Hazard Insurance – wording changes
Renewal Notice for Hazard Insurance – wording changes
Properly Evaluating Loss Mitigation Applications from a Borrower – The servicer must follow their policies and procedures.
Early Intervention Requirements – The requirements recur for each billing cycle.
Notice of Complete Application for Loss Mitigation must be provided to the borrower within five days. This also entitles the borrower to protection from foreclosure.

These notices are produced outside of the Shaw applications.

Successors in Interest – (effective April 19, 2018) This creates a new classification for persons who have an ownership interest in the property but are not obligated under the mortgage. The successor in interest is entitled to all the protections under RESPA. A successor in interest would receive the property upon the death of a relative or joint tenant, as a result of a divorce or legal separation or through a trust. The servicer must notify the successor in interest of their status when the servicer receives the proper documentation. Shaw will be making the necessary changes to accommodate the successor in interest classification.

Significant Dates:

February 17, 2017 – (changed from January 2017) Comments due on proposed rulemaking for cyber risk management standards for large and interconnected financial institutions.

February 21, 2017 – Comments due for CFPB’s “Request for Information Regarding Consumer Access to Financial Records.”

September 15, 2017 – Effective date for Phase 2 of NACHA’s same day ACH Processing.

September 29, 2017 – Effective date for NACHA Operating Rules that require registration of third-party senders.

October 19, 2017 – Effective date for CFPB final mortgage servicing rules covering:

  • Definition of delinquency
  • Forced placed insurance notices
  • Early intervention for defaults
  • Loss mitigation
  • Prompt payment crediting
  • Wording changes on statements to reflect successors in interest
  • Small servicers

Emerging Legislation:

Shaw Systems continues to monitor the legislation submitted. Look for updates in the future.