Massachusetts Amends Debt Collector and Third-Party Loan Servicer Regulations

Ballard Spahr LLP

The Massachusetts Division of Banks recently amended 209 CMR 18, "Conduct of the Business of Debt Collectors and Loan Servicers." The final amended regulations clarify and establish new standards of conduct for debt collectors and third-party loan servicers. Among the changes, which took effect on October 11, 2013, the amendment enumerates examples of prohibited conduct regarding unfair servicing practices in general and mortgage loan servicing practices in 209 CMR 18.21 and 209 CMR 18.21A.  

The amended regulations direct third-party loan servicers to comply with additional requirements related to: 

  • Evaluating borrowers for loss mitigation options
  • Providing borrowers with written acknowledgement of receipt of loan modification documentation
  • Concluding the modification process before initiating foreclosure
  • Providing borrowers with contact information for a designated individual
  • Offering or accepting alternative loss mitigation options

In addition, third-party loan servicers are now required under 209 CMR 18.21 to maintain procedures to ensure accuracy and timely updating of borrowers' account information, including the posting of payment and the imposition of fees.  

Persons otherwise exempt from licensure as a debt collector or registration as a third-party loan servicer are required to comply with the fair debt collection and loan servicing practices set forth in 209 CMR 18.21 and 18.21A. 

The amendment also prohibits debt collectors from causing expense to any consumer in the form of collect telephone calls, text messages, download fees, data usage fees, or similar charges, without the consumer's express permission to communicate in that manner. Debt collectors may place non-collect telephone calls to a consumer's cell phone, however, if the consumer provides the number as his or her personal telephone number.

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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