Massachusetts Finalizes Debt Collection And Loan Servicing Rule

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On October 17, the Massachusetts Division of Banks released final regulations intended to parallel and supplement new mortgage servicing requirements promulgated by the CFPB and included in National Mortgage Servicing Settlement. The new regulations generally (i) prohibit third-party mortgage servicers from initiating a foreclosure when an application for a loan modification is in process, (ii) require that third-party mortgage servicers ensure that a creditor has the right to foreclose and that any foreclosure-related documents are properly prepared and executed based on personal knowledge, and (iii) mandate that third-party servicers provide a single point of contact for a borrower, follow detailed loan modification procedures, communicate with borrowers in a timely manner, and establish policies and procedures that ensure effective monitoring and oversight of certain third party providers (e.g., law firms, foreclosure firms, etc.). The new regulations also, among other things, (i) amend the definition of “debt collector” to include active debt buyers, (ii) clarify the definition of net worth for debt collectors, (iii) expand the limitations on contact with a consumer by a debt collector to include cellular telephone and text messaging, and (iv) add significant events of a debt collector and third party loan servicer that must be reported. The new requirements are effective immediately.

Topics:  CFPB, Debt Collection, Loan Modifications, Loan Servicing

Published In: General Business Updates, Consumer Protection Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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