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From Banking and Finance Law Daily, October 4, 2017

CFPB addresses timing for foreclosure and bankruptcy related disclosures

By Andrew A. Turner, J.D.

The Consumer Financial Protection Bureau has provided mortgage servicers with clearer and more flexible standards for providing modified written early intervention notices to borrowers who have invoked their cease communication rights under the Fair Debt Collection Practices Act, with rule amendments that become effective on Oct. 19, 2017. The CFPB has also proposed amendments to clarify timing requirements for servicers to transition to providing modified or unmodified periodic statements and coupon books to consumers in connection with their bankruptcy case.

"Today’s action should make it easier for mortgage borrowers to receive timely information from their mortgage servicers about available options for saving their home, even if they have submitted a request to cease communication," said CFPB Director Richard Cordray. "In addition, we are proposing changes to clear up confusion about when to provide periodic statements with important loan information to borrowers in bankruptcy."

Amendments on servicer communication. To alleviate concerns that 2016 mortgage servicing amendments require servicers to provide the notice exactly on the 180th day after providing a prior notice about foreclosure prevention options, the CFPB is giving servicers a 10-day window to provide the modified notice at the end of the 180-day period. The CFPB is seeking comment on whether the Reg. X—Real Estate Settlement Procedures (12 CFR Part 1024) amendments protect consumers who have invoked their cease communication rights while affording them timely access to information about loss mitigation.

Proposal on periodic statements. Based on feedback received regarding implementation of the 2016 amendments, the CFPB has learned that aspects of the single-billing-cycle exemption and timing requirements may create unintended challenges and be subject to different legal interpretations. The proposed amendments to Reg. Z—Truth in Lending (12 CFR Part 1026) would replace the single-billing-cycle exemption with a single statement exemption. The proposal would provide a single-statement exemption for the next periodic statement or coupon book that a servicer would otherwise have to provide, regardless of when in the billing cycle the triggering event occurs.

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