Timing and communications key to $37M mortgage servicing enforcement. Are yours up to snuff?

The CFPB has taken its first enforcement action under the servicing rules that went into effect early this year, hitting Flagstar Bank for $27.5 million in victim compensation and $10 million in penalties for actions related to loan modifications. Among Flagstar's alleged violations: failing to meet mandatory timelines to notify borrowers about the status of their applications, failing to deliver communications about incomplete applications and missing paperwork, miscalculating borrower income, wrongfully denying loan modifications, and misinforming borrowers about their appeal rights. It's time to review how well your servicing processes meet the new rules.   Guide to CFPB's Regulation of Mortgage Servicing The Consumer Financial Protection Bureau’s new servicing rules dictate very tight specifics on servicer-borrower communications. Spelled out are the very items that must be included and the precise timing of the communications. There are also increased requirements on what documentation must be kept and how quickly it must be accessible. The servicing regulations also enlist business partners as watchdogs. Servicers are responsible for maintaining pathways that deliver accurate and current information between themselves and their service providers. And loan owners are as liable as servicers for non-compliance. Learn more about the servicing rule and the CFPB’s monitoring of servicing transfers in the Guide to the CFPB’s Regulation of Mortgage Servicing.   Contents include: The CFPB’s Servicing Rule Exemptions Preemption of State Laws Continuity of Contact with Delinquent Borrowers Loss-Mitigation Procedures Recordkeeping Requirements Implementation Challenges with Periodic Statements Interest-Rate Adjustment Notices Error Resolution and Information Requests Implementation Suggestions Servicing Transfers Applicable Laws Areas of Focus Plans for Handling a Transfer Settlements Involving State Attorneys General Servicing Issues Settlement Requirements Make sure you’re up on the current servicing requirements: Order today.

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