CFPB PROPOSED AMENDMENTS:Preparing for the New Rules

NEW RULES – MORE CHANGES

General Session 1Monday, July 209:00 - 10:30 a.m.

Panelists

• Adam J. Wilde: Codilis & Associates• Brady Lighthall: Weltman Weinberg & Reis• Elizabeth Wellborn: Founder • Andrew Boylan: McCarthy & Holthus• J.P Sellers: Mackie Wolf Zientz & Mann• William Corbett CFPB Senior Counsel

Introduction

• 01/10/2014: The New Mortgage Servicing Rules took effect. – Drastically changed the mortgage servicing business.– Like many rules, they were subject to interpretation. • Many of us are still advising our clients on how to

comply with these rules.• Caselaw will begin to shape how to comply.

• Last ALFN ANSWERS: CFPB Compliance: How The New Rules Intersect with Other Laws

Questions for the Panelists?

You can submit them by:

•Visiting the poll link: https://www.polleverywhere.com/free_text_polls/DhdMuV8EOiqrXo1/web

•Texting 65261 and your question to 22333

•Visiting our Poll site for access to all of our Session polls: Pollev.com/alfn

•Ask questions or make comments verbally by using the microphones provided in the session room

The Proposed Amendments

• 12/15/2014: The CFPB proposed new corrections, clarifications, and amendments to RESPA and TILA.– Provided a 3 month opportunity to present comments.

• Industry was very responsive.– Over 160 comments were submitted– Including the ALFN

Questions for the panelists? Text 65261 and your question to 22333

The Proposed Amendments

1. Successors in interest.2. Definition of delinquency3. Requests for information.4. Force placed insurance5. Early intervention6. Loss mitigation7. Prompt payment crediting8. Periodic statements9. Small servicer

Questions for the panelists? Text 65261 and your question to 22333

The Proposed Amendments

• Purpose of this presentation:– We will discuss most of the proposed comments and its

impact on law.– We will discuss in detail the ALFN’s Official Comment to

the Proposed Amendments.– We will provide perspective from both the CFPB, impact

on servicer, and the legal potentials.• DISCLAIMER: Will’s Role.

Questions for the panelists? Text 65261 and your question to 22333

§1024.39 Early Intervention Requirements

• Establishing Live contact:– What is the current rule?– What is the Proposed Rule?• How does it differ from the prior rule?• The CFPB’s background for the proposed amendment?

– ALFN’s legal perspective on the Proposed Early Intervention Requirements?• Once referred to foreclosure?• New bankruptcy implications?

Questions for the panelists? Text 65261 and your question to 22333

1026.41 Periodic Statements

• Amount Listed on the Periodic Statement: – Comment 41(d)(1): Reinstatement, Temporary Loss Mitigation, and Permanent

Modifications.• The Current Rule • CFPB Proposed Amendment• CFPB Background Regarding the Proposal• ALFN Perspective

• Providing Statements to Consumers in Bankruptcy: – Comment 41(e)(5): Limitation of the exemption

• The Current Rule – October 2013 IFR• CFPB Proposed Amendment• CFPB Background Regarding the Proposal• ALFN Perspective

Questions for the panelists? Text 65261 and your question to 22333

1026.41 Periodic Statements

• Charged-Off Loans:– Comment 41e(6): Charged-Off Loans

• CFPB Proposed Amendment• ALFN Perspective

• Bankruptcy Disclaimers: – Comment 41(f)(2): Discussing Bankruptcy Result

• CFPB Proposed Amendment• ALFN Perspective

• Multiple Obligors:– Comment 41(f)(4): one notice

• CFPB Proposed Amendment• ALFN Perspective

Questions for the panelists? Text 65261 and your question to 22333

Successors in Interest

• Proposed Rule: Extension of the Mortgage Servicing Rules to Extend to Successor’s in Interest under the Garn St. Germain Act.– CFPB’s Proposed Amendment– ALFN’s Perspective

• Legal Issues:– FDCPA violations– Strategic Default

• Proposed changes should amendments be madeQuestions for the panelists? Text 65261 and your question to 22333

1024.41 Loss Mitigation Procedures

• 41(b)-1.ii: Receipt of loss mitigation from potential successor in interest.– The Rule.– CFPB Background Regarding Proposed Amendment– ALFN position

• Review of a loss mitigation application submission: The timing.– Current Rule– Proposed Rule• CFPB Proposed Amendment• ALFN position

Questions for the panelists? Text 65261 and your question to 22333

1024.41 Loss Mitigation Procedures

• 41(c)(2) Incomplete Loss Mitigation Application.– Proposed rule: Payment Forbearance and short-term

repayment plan.– CFPB Proposed Amendment– ALFN position

• 41(c)(2)(iv) Facially complete application timing– Proposal– CFPB Proposed– ALFN position

Questions for the panelists? Text 65261 and your question to 22333

1024.41 Loss Mitigation Procedures

• 41(f)(1): Prohibition on Foreclosure Review Period: Impact on senior lienholder– CFPB Proposed Amendment– CFPB Background– ALFN position

• 41(g) Prohibition on Foreclosure Sale– The proposal.• CFPB Proposed Amendment• ALFN position

– Color Commentary: State specific approaches.

1024.41 Loss Mitigation Procedures

• (41)(i) duplicative requests– Current rule: 1 and done.– Proposed rule: • CFPB Background • ALFN position

• 41(k) Servicing Transfers– Proposed rule: • CFPB Background• ALFN position

Questions for the panelists? Text 65261 and your question to 22333

Defining Delinquency

• CFPB’s proposed definition of delinquency:Delinquency is a period of time during which a borrower and the borrower’s mortgage loan obligation are delinquent. A borrower and a borrower’s mortgage loan obligation are delinquent beginning on the day a periodic payment sufficient to cover principal, interest, and, if applicable escrow, became due and unpaid, until such time as the payment is made.– CFPB BACKGROUND on Proposals– CFPB recommends comments

Questions for the panelists? Text 65261 and your question to 22333

Defining Delinquency

• ALFN’s Comments:– Non-monetary default.

• ALFN’s Proposed recommendations:• It is recommended that the definitions section contain a definition of

the term default in addition to the definition of the term delinquent– Monetary Default occurs when the borrower fails to pay the full

amount of the periodic payment on the date it is due.– Non-Monetary Default occurs when the borrower fails to comply

with any obligation outlined in the note or security instrument, other than failure to pay the full amount of the periodic payment on the date it is due.

Questions for the panelists? Text 65261 and your question to 22333

Defining Delinquency

• ROLLING DELINQUENCY: Perpetual default– Unintended consequence.

• Cross-collateralization? Potential pitfalls.– Residential? – Which one?

• CFPB poses: Should the Bureau limit servicers’ use of a payment tolerance to a specific dollar amount or percentage of the periodic payment amount, and if so, what should the specific amount or percentage be?– CFPB position.

Questions for the panelists? Text 65261 and your question to 22333

CFPB PROPOSED AMENDMENTS:Preparing for the New Rules

• When we last met:– Many of the ambiguities are now being addressed:

Definition of delinquency, loss mitigation procedures, timelines.

• But within the clarity, new issues have developed.– How they intersect with other laws, may be problematic.

• Benefits: Luckily, many interested groups have raised the issues through the comment period.

• Where does that leave us?– CFPB expect to have a final rule Spring of 2016.

Questions for the panelists? Text 65261 and your question to 22333

CFPB Compliance: How The New Rules Intersect with Other Laws

• Questions?

Thank YOU ALFN!