Written By JiJi Bahhur, Regulatory Compliance Counsel
Earlier this week, the CFPB issued its lengthy proposals on TILA/RESPA Combined Disclosures and HOEPA, which we briefly blogged about. I’m almost sure that was enough to put most compliance officers in a frenzy. But that’s not all we have to look forward to this year! In fact, there are quite a few other issues that the CFPB has in the works, mainly due to mandates prescribed by the Dodd-Frank Act. Today, I will focus on the mortgage servicing mandate – specifically, the periodic mortgage statement.
The Dodd-Frank Act requires creditors or mortgage servicers to provide most mortgage borrowers with periodic statements containing certain information. The periodic statement must include the principal loan amount, the current interest rate, the date on which the interest rate may next reset, a description of any late payment and penalty fees, information about housing counselors, and a telephone number and email address that may be used to contact the mortgage servicer/creditor. The idea is to make it easier for homeowners to understand their loans and avoid unnecessary costs and fees.
If you noticed my usage of the word “most” when referring to what borrowers must receive the periodic statements, it’s because Dodd-Frank provides an exception to the mortgage statement requirement. A mortgage servicer or creditor that provides coupon books to its borrowers is excepted from the requirement to provide mortgage statements if the mortgage has a fixed rate and the coupon book contains substantially the same information as required to be on the monthly statement.
On February 13, 2012, the CFPB published a prototype monthly mortgage statement to solicit general feedback from the public. However, the draft statement was not accompanied by a proposed rule. We are expecting a proposed rule to be released sometime this summer since Dodd-Frank requires a final rule by January 21, 2013. The mortgage statement requirement comes from Section 1420 of Dodd-Frank and will become part of Regulation Z once the rule is finalized.
We have blogged on mortgage servicing and the periodic statement requirement a few times. These blogs can be found here, here, and here. I also wanted to bring to your attention the CFPB’s Fact Sheet on Mortgage Servicing, as it contains very valuable information and does a great job summarizing the items that are being considered for the mortgage servicing proposal.
NAFCU Video Contest – Members Only. Enter for the chance to win a flip video camera and a free registration for anyone at your credit union to our advocacy event of the year – NAFCU's 2012 Congressional Caucus. In 3-minutes or less, tell us what benefits, experiences or connections you enjoy most as a NAFCU member. It’s easy to enter – just grab your smart phone or video camera, upload your video to You Tube and send us your link. Click here for more info.