WASHINGTON—The CFPB’s final rule amending parts of its 2013 mortgage rules will likely place more regulatory burden on credit unions, say CUNA and NAFCU, which are both concerned over the new regulations released by the Bureau on Thursday.
Both trade associations say they are carefully reviewing the rule.
“NAFCU will thoroughly analyze this 900-page final rule on mortgage servicing for its full impact on credit unions,” said NAFCU Director of Regulatory Affairs Alexander Monterrubio. “At first glance, there appear to be a number of provisions that will substantially impact credit unions.
“For example, the projected implementation dates for some portions of this rule are likely to coincide with credit unions’ ongoing compliance preparations under CFPB’s revised Home Mortgage Disclosure Act rule,” continued Monterrubio. “The HMDA rule changes alone will excessively tax the resources of many credit unions. We will continue to advocate for the Bureau to reach back and correct the unintended consequences that have resulted from its rulemakings.”
The final rule requires mortgage servicers to:
- Provide certain borrowers with foreclosure protections more than once over the life of the loan;
- Expand consumer protections to surviving family members and other homeowners;
- Provide more information to borrowers in bankruptcy;
- Require servicers to notify borrowers when loss mitigation applications are complete;
- Clarify servicers’ obligations to avoid dual-tracking and prevent wrongful foreclosures; and
- Clarify when a borrower becomes delinquent.
Successors in interest are defined as individuals who inherit or receive property when there is an outstanding mortgage loan on the property.
The final rule establishes a broad definition of successor in interest that generally includes persons who receive property:
- Upon the death of a relative or joint tenant;
- As a result of a divorce or legal separation;
- Through certain trusts; or
- From a spouse or parent.
CUNA said it met with the CFPB in March to discuss successors in interest, believing the rule will result in operational challenges for servicers, particularly with regard to accurately confirming the status of a successor in interest.
Another measure generally requires that mortgage servicers provide borrowers in bankruptcy periodic statements with specific information tailored for bankruptcy, as well as a modified written early intervention notice to let those borrowers know about loss mitigation options, CUNA noted.
After CFPB proposed this rule in 2014, NAFCU argued that the Bureau did not give enough consideration to how it would affect small entities, which did not participate in the behavior responsible for the financial crisis. The association also raised concerns about the proposed amendments on successors in interest, requests for information from servicers, loss mitigation, early intervention in delinquency and about delinquency within the context of Reg Z’s prompt payment crediting rule.
Most of the provisions of the final rule will take effect 12 months after publication in the Federal Register. The provisions relating to successors in interest and the provisions relating to periodic statements for borrowers in bankruptcy will take effect 18 months after publication in the Federal Register.
NAFCU said it will update credit unions on the final rule and will issue a Final Regulation.