At the January 28, 2014 meeting of the Rhode Island Governor’s Insurance Council, Joseph Torti III, Deputy Director and Superintendent of Banking for the Rhode Island Department of Business Regulation (the “DBR”), stated that the DBR will seek legislation which will require the licensing of mortgage loan servicers.  We expect this legislation will include Rhode Island requirements for servicers that parallel or expand upon the new requirements for mortgage loan servicers implemented at the federal level in January 2014.

The federal Consumer Financial Protection Bureau (the “CFPB”) implemented new mortgage loan servicing regulations effective January 10, 2014.  As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the new regulations amend Regulation X which implements the Real Estate Settlement Procedures Act (“RESPA”), and they amend Regulation Z which implements the Truth in Lending Act (the “TILA”).

The amendments to Regulation X address servicers’ error resolution obligations, changes to the “Qualified Written Request” rules, and new protections for borrowers in connection with force-placed insurance.  The amendments also address loss mitigation rules for delinquent borrowers.

The amendments to Regulation Z affect servicers’ disclosure obligations regarding transfers of servicing, periodic billing statements, payment crediting and payoff statements, interest rate adjustment notices, and management of escrow accounts. 

Look for future alerts on the topic of Rhode Island licensing requirements for mortgage loan servicers and on the changes to federal RESPA and TILA laws and regulations which affect mortgage loan servicing.