Client Alert: CFPB’s Successor in Interest Rules Take Effect April 19, 2018: What You Need to Know

by Smith Debnam Narron Drake Saintsing & Myers, LLP
Contact

Smith Debnam Narron Drake Saintsing & Myers, LLP

On April 19, 2018, the CFPB’s Successor in Interest Rules take effect.  Here’s what you need to know:

What do the Successor in Interest Rules require?

The Rules are really modifications to the Mortgage Servicing Rules which are already in place and enable mortgage servicers to communicate with potential and confirmed successors in interest without violating the Fair Debt Collections Practices Act.

Why did the CFPB Add the Servicers in Interest Rules?

The Rules were added to provide additional consumer protections to surviving family members and others who have an interest in a dwelling subject to a mortgage

Are Small Servicers exempt?

There is no general exemption for small servicers but small servicers do have the same exemptions with respect to confirmed successors in interest that they have regarding other borrowers and consumers.

Who is a Successor in Interest?

Most commonly, a successor in interest is a person who has an ownership interest in property securing a mortgage loan, when that ownership interest was transferred:

  • by devise, descent, or operation of law on the death of a joint tenant;
  • to a relative after the death of the borrower;
  • to the spouse or children of the borrower; and
  • as a result of a dissolution of marriage decree

Do I need to address Successors in Interest in my policies and procedures?

Unless an exemption applies, you are required to maintain policies and procedures reasonably designed to:

  • Promptly facilitate communication with any potential or confirmed successor in interest regarding the property securing the loan upon receipt of notice of the borrower’s death or of transfer of the property;
  • Promptly determine what documents are reasonably required to confirm the person’s identity and ownership interest and promptly provide the person with those documents and a direction as to how to submit a written request for information;
  • Promptly notify the person upon receipt of the documents what additional documents are necessary confirmation of the person’s status as a successor in interest and whether or not the person is a successor in interest.

How do I confirm a person is a successor in interest?

  • When a servicer receives notice, either in writing or otherwise, of a potential successor in interest, the servicer must “promptly” facilitate communication with the potential successor in interest  and provide the potential successor in interest with a “written description of the documents the servicer reasonably requires to confirm the person’s identity and ownership in the property[.]”

Are there deadlines for communications?

In some instances, yes. For example, if you receive a written request for information pursuant to 12 CFR 1024.36, there are time limits which must be complied with.

How are confirmed successors in interest treated?

Generally, confirmed successors in interest are treated the same as the original borrower for the purposes of the Mortgage Servicing Rules and as a “consumer” for the purposes of the Truth in Lending Act. This means any confirmed successor in interest is entitled to submit notices of error, requests for information, and requests for a payoff statement with respect to the mortgage loan account.

Am I required to make any additional disclosures to a confirmed Successor in Interest?

After confirming that a person is a successor in interest, a servicer may, but is not required, to provide a written notice to that person. If provided, the written notice must include certain details, including an acknowledgement that the servicer has confirmed the person’s identity as a successor in interest, and a notice that the successor in interest is not liable for the mortgage debt and cannot be required to pay off the mortgage, except that the lender has a security interest in the property and the right to foreclose on the property, when permitted by law and authorized under the mortgage loan contract.

Does a confirmed successor in interest have the right to loss mitigation?

Regardless of whether a successor in interest assumed the mortgage loan obligation, a servicer must review and evaluate a loss mitigation application if it is complete and is received from a confirmed successor in interest.

What information do I have to share with successors in interest.

You must send successors in interest disclosures and other information concerning:

  • Escrow accounts, payments and account balances;
  • Mortgage servicing transfers and mortgage transfers;
  • Error resolution;
  • Information requests;
  • Force-placed insurance;
  • Early intervention;
  • Loss mitigation;
  • Post-consummation events;
  • Payoff statements; and
  • Periodic Statements.

What information should I omit?

Contact information and personal financial information should never be shared with other parties.

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.

© Smith Debnam Narron Drake Saintsing & Myers, LLP | Attorney Advertising

Written by:

Smith Debnam Narron Drake Saintsing & Myers, LLP
Contact
more
less

Smith Debnam Narron Drake Saintsing & Myers, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.