Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X), 47953-47958 [2017-21912]

Download as PDF 47953 Rules and Regulations Federal Register Vol. 82, No. 198 Monday, October 16, 2017 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1024 [Docket No. CFPB–2017–0031] RIN 3170–AA77 Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act (Regulation X) Bureau of Consumer Financial Protection. ACTION: Interim final rule with request for public comment. AGENCY: The Bureau of Consumer Financial Protection (Bureau) is issuing an interim final rule amending a provision of the Regulation X mortgage servicing rules issued in 2016 relating to the timing for servicers to provide modified written early intervention notices to borrowers who have invoked their cease communication rights under the Fair Debt Collection Practices Act. The Bureau requests public comment on this interim final rule. DATES: This interim final rule is effective on October 19, 2017. Comments must be received on or before November 15, 2017. ADDRESSES: You may submit comments, identified by Docket No. CFPB–2017– 0031 or RIN 3170–AA77, by any of the following methods: • Email: FederalRegisterComments@ cfpb.gov. Include Docket No. CFPB– 2017–0031 or RIN 3170–AA77 in the subject line of the email. • Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments. • Mail: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552. • Hand Delivery/Courier: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552. jstallworth on DSKBBY8HB2PROD with RULES SUMMARY: VerDate Sep<11>2014 14:58 Oct 13, 2017 Jkt 244001 Instructions: All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to https:// www.regulations.gov. In addition, comments will be available for public inspection and copying at 1700 G Street NW., Washington, DC 20552, on official business days between the hours of 10 a.m. and 5:00 p.m. Eastern Time. You can make an appointment to inspect the documents by telephoning 202–435– 7275. All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information, such as account numbers or Social Security numbers, should not be included. Comments will not be edited to remove any identifying or contact information. FOR FURTHER INFORMATION CONTACT: Joel L. Singerman, Counsel; or William R. Corbett or Laura A. Johnson, Senior Counsels, Office of Regulations, at 202– 435–7700 or https:// reginquiries.consumerfinance.gov/. SUPPLEMENTARY INFORMATION: I. Summary of the Interim Final Rule On August 4, 2016, the Bureau issued the Amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) (2016 Mortgage Servicing Final Rule) amending certain of the Bureau’s mortgage servicing rules.1 The Bureau has learned, through its outreach in support of industry’s implementation of the 2016 Mortgage Servicing Final Rule, that certain technical aspects of the rule relating to the timing for servicers to provide modified written early intervention notices to borrowers who have invoked their cease communication rights under the Fair Debt Collection Practices Act (FDCPA) may create unintended challenges in implementation. To alleviate any unintended challenges and facilitate timely provision of written early intervention notices to these borrowers, 1 81 PO 00000 FR 72160 (Oct. 19, 2016). Frm 00001 Fmt 4700 Sfmt 4700 the Bureau is issuing this interim final rule to address the provision in Regulation X, which would otherwise become effective October 19, 2017.2 Among other things, the 2016 Mortgage Servicing Final Rule addresses Regulation X’s provision regarding early intervention requirements when a borrower has invoked the cease communication right under the FDCPA.3 Under that provision (and with certain exceptions not applicable here), a servicer subject to the FDCPA with respect to that borrower’s loan must provide a modified written early intervention notice to that borrower on a periodic basis but is prohibited from doing so more than once during any 180-day period. Based on feedback received through its efforts to support industry implementation of the 2016 Mortgage Servicing Final Rule, the Bureau understands that there is concern among some servicers that this 180-day prohibition in § 1024.39(d)(3)(iii), read in conjunction with the early intervention provision’s other timing requirements regarding written notices, requires servicers to provide the notice exactly on the 180th day after providing a prior notice. The Bureau did not intend this result and is concerned that the provision imposes too narrow a window for compliance and may provide insufficient guidance as to when and how servicers comply with the timing requirements under certain circumstances. Thus (and as explained in further detail below), the Bureau is issuing this interim final rule to amend § 1024.39(d)(3)(iii) to give servicers a 10day window to provide the modified notice at the end of the 180-day period. The Bureau believes that the interim final rule provides clearer and more flexible standards than the timing requirements adopted in the 2016 Mortgage Servicing Final Rule, offering greater certainty for implementation and compliance, without undermining important borrower protections relating 2 The Bureau is addressing in a separate proposed rule another disclosure timing provision of the 2016 Mortgage Servicing Final Rule that would otherwise become effective April 19, 2018. 3 The provisions of Regulation X discussed herein were amended by the 2016 Mortgage Servicing Final Rule but are not effective until October 19, 2017. To simplify review of this document and differentiate between those amendments and this rule, this document generally refers to the 2016 amendments as though they already are in effect. E:\FR\FM\16OCR1.SGM 16OCR1 47954 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Rules and Regulations to early intervention. The Bureau seeks public comment on this interim final rule. II. Background A. 2016 Mortgage Servicing Final Rule and Implementation Support jstallworth on DSKBBY8HB2PROD with RULES In August 2016, the Bureau issued the 2016 Mortgage Servicing Final Rule, which amends certain of the Bureau’s mortgage servicing rules in Regulations X and Z.4 Most of these rules become effective on October 19, 2017, except that the provisions relating to bankruptcy periodic statements and successors in interest become effective on April 19, 2018. The Bureau has worked to support implementation by providing an updated compliance guide, other implementation aids, a technical corrections final rule,5 policy guidance regarding early compliance,6 and informal guidance in response to regulatory inquiries. Information regarding the Bureau’s implementation support initiative and available implementation resources can be found on the Bureau’s regulatory implementation Web site at https:// www.consumerfinance.gov/policycompliance/guidance/implementationguidance/mortserv/. Based on its ongoing outreach, the Bureau believes that industry has made substantial implementation progress regarding the 2016 Mortgage Servicing Final Rule. However, as discussed herein, the Bureau believes that a limited disclosure timing provision under Regulation X from the 2016 Mortgage Servicing Final Rule may pose unintended implementation challenges and is appropriate to address in an interim final rule before it goes into effect. 4 81 FR 72160 (Oct. 19, 2016). The amendments cover nine major topics and focus primarily on clarifying, revising, or amending provisions regarding force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X’s servicing provisions; and prompt crediting and periodic statement requirements under Regulation Z’s servicing provisions. The amendments also address proper compliance regarding certain servicing requirements when a person is a potential or confirmed successor in interest, is a debtor in bankruptcy, or sends a cease communication request under the FDCPA. 5 Amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z); Correction, 82 FR 30947 (July 5, 2017). 6 Policy Guidance on Supervisory and Enforcement Priorities Regarding Early Compliance With the 2016 Amendments to the 2013 Mortgage Rules Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z), 82 FR 29713 (June 30, 2017). VerDate Sep<11>2014 14:58 Oct 13, 2017 Jkt 244001 B. Purpose and Scope of Interim Final Rule As a result of feedback and questions received from servicers, the Bureau has decided to issue an interim final rule amending Regulation X relating to the timing for servicers to provide modified written early intervention notices to borrowers who have invoked their cease communication rights under the FDCPA. The Bureau believes this interim final rule provides clearer and more flexible standards than the timing requirements adopted in the 2016 Mortgage Servicing Final Rule, offering greater certainty for implementation and compliance, while also not undermining borrower protections. III. Legal Authority The Bureau is issuing this interim final rule pursuant to its authority under RESPA and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act),7 including the authorities discussed below. This interim final rule amends a provision previously adopted by the Bureau in the 2016 Mortgage Servicing Final Rule. In doing so, the Bureau relied on one or more of the authorities discussed below, as well as other authority. The Bureau is issuing this interim final rule in reliance on the same authority and for the same reasons relied on in adopting the relevant provisions of the 2016 Mortgage Servicing Final Rule, as discussed in detail in the Legal Authority and Section-by-Section Analysis parts of the 2016 Mortgage Servicing Final Rule. A. RESPA Section 19(a) of RESPA, 12 U.S.C. 2617(a), authorizes the Bureau to prescribe such rules and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of RESPA, which include its consumer protection purposes. In addition, section 6(j)(3) of RESPA, 12 U.S.C. 2605(j)(3), authorizes the Bureau to establish any requirements necessary to carry out section 6 of RESPA, and section 6(k)(1)(E) of RESPA, 12 U.S.C. 2605(k)(1)(E), authorizes the Bureau to prescribe regulations that are appropriate to carry out RESPA’s consumer protection purposes. The amendments or clarifications to Regulation X in the interim final rule are intended to achieve some or all these purposes. 7 Public PO 00000 Law 111–203, 1245 Stat. 11376 (2010). Frm 00002 Fmt 4700 Sfmt 4700 B. The Dodd-Frank Act Section 1022(b)(1) of the Dodd-Frank Act, 12 U.S.C. 5512(b)(1), authorizes the Bureau to prescribe rules ‘‘as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.’’ RESPA and title X of the Dodd-Frank Act are Federal consumer financial laws. Section 1032(a) of the Dodd-Frank Act, 12 U.S.C. 5532(a), provides that the Bureau ‘‘may prescribe rules to ensure that the features of any consumer financial product or service, both initially and over the term of the product or service, are fully, accurately, and effectively disclosed to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or service, in light of the facts and circumstances.’’ The authority granted to the Bureau in section 1032(a) of the Dodd-Frank Act is broad and empowers the Bureau to prescribe rules regarding the disclosure of the ‘‘features’’ of consumer financial products and services generally. Accordingly, the Bureau may prescribe rules containing disclosure requirements even if other Federal consumer financial laws do not specifically require disclosure of such features. Section 1032(c) of the Dodd-Frank Act, 12 U.S.C. 5532(c), provides that, in prescribing rules pursuant to section 1032 of the Dodd-Frank Act, the Bureau ‘‘shall consider available evidence about consumer awareness, understanding of, and responses to disclosures or communications about the risks, costs, and benefits of consumer financial products or services.’’ Accordingly, in issuing the interim final rule to amend provisions authorized under section 1032(a) of the Dodd-Frank Act, the Bureau has considered available studies, reports, and other evidence about consumer awareness, understanding of, and responses to disclosures or communications about the risks, costs, and benefits of consumer financial products or services. IV. Administrative Procedure Act To the extent that notice and comment would otherwise be required, the Bureau finds that there is good cause to publish this interim final rule without notice and comment and for the rule to be effective less than 30 days after publication. See 5 U.S.C. 553(b)(3)(B), (d)(3). As explained elsewhere in this rule, the Bureau has heard concerns from servicers that the 180-day prohibition in current E:\FR\FM\16OCR1.SGM 16OCR1 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Rules and Regulations § 1024.39(d)(3)(iii) requires them to provide the modified early intervention notice to delinquent borrowers who have invoked their right to cease communication under the FDCPA exactly on the 180th day after providing a prior notice. The Bureau did not intend this result and is concerned that current § 1024.39(d)(3)(iii) imposes too narrow a window for compliance and could cause legal risk for servicers, particularly when the 180th day falls on a Saturday, Sunday, or public holiday. This interim final rule amends § 1024.39(d)(3)(iii) to give servicers a 10day window to provide the modified notice at the end of the 180-day period. The Bureau believes that this amendment will offer greater certainty for implementation and compliance, while also not undermining borrower protections. The Bureau finds that it would be impracticable to provide notice and comment before finalizing this rule because § 1024.39(d)(3)(iii) would otherwise become effective on October 19, 2017, and could cause unintended challenges in the implementation of the notice requirement. For similar reasons, the Bureau finds that it is impracticable to provide a 30-day period between publication of this rule and its effective date. The Bureau is requesting comment on this rule. Based on any comments received (and mindful of the need to avoid market disruption), the Bureau will consider whether to revisit this rule. V. Section-by-Section Analysis A. Regulation X Section 1024.39 Early Intervention Requirements for Certain Borrowers jstallworth on DSKBBY8HB2PROD with RULES 39(d) Fair Debt Collection Practices Act—Partial Exemption 39(d)(3). In this interim final rule, the Bureau is amending § 1024.39(d)(3)(iii) to specify in more detail when a servicer must provide the modified written early intervention notice, as required by § 1024.39(b) and (d), at the end of the 180-day period after the servicer provided a prior written notice. In general, § 1024.39(d) provides a partial exemption from the early intervention requirements for servicers that are subject to the FDCPA with respect to borrowers who have invoked their cease communication rights pursuant to section 805(c) of the FDCPA.8 Section 8 This section-by-section analysis discusses § 1024.39(d) generally in terms of a borrower’s cease communication notification and its effect on a servicer’s obligations under the early intervention requirements, but the provision applies equally to VerDate Sep<11>2014 14:58 Oct 13, 2017 Jkt 244001 1024.39(d)(3) requires servicers to provide a modified written early intervention notice to those borrowers under certain circumstances, but § 1024.39(d)(3)(iii) prohibits a servicer from providing the modified notice more than once during any 180-day period. As revised under this interim final rule, § 1024.39(d)(3)(iii) gives servicers a 10-day window to provide the required notices at the end of the 180-day period. In particular, revised § 1024.39(d)(3)(iii) retains the 180-day prohibition and also specifies: (1) If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice, and (2) if a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. Section 1024.39(b) generally requires that a servicer provide a written early intervention notice prior to the 45th day of delinquency, and again no later than 45 days after each payment due date so long as the borrower remains delinquent. Section 1024.39(b) further provides that a servicer is not required to provide a notice more than once in any 180-day period, but also that a servicer must provide the written notice no more than 180 days after the servicer has previously provided the notice if the borrower remains delinquent and is 45 days or more delinquent at the end of the 180-day period. Among other things, § 1024.39(d) modifies the timing requirements for providing the written notice required by § 1024.39(b) when a borrower has invoked the cease communication right under the FDCPA. Under § 1024.39(d)(2), a servicer subject to the FDCPA with respect to that borrower’s loan is exempt from the written notice requirements of § 1024.39(b), but only if no loss mitigation option is available, or while any borrower on that mortgage loan is a debtor in bankruptcy. If neither of those conditions is met, § 1024.39(d)(3) provides that the a borrower’s notice to the servicer that the borrower refuses to pay a debt. See FDCPA section 805(c) (‘‘If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt . . . .’’). PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 47955 servicer must comply with the written notice requirements of § 1024.39(b), as modified by § 1024.39(d)(3)(i) through (iii).9 The relevant provision for purposes of this interim final rule is § 1024.39(d)(3)(iii), which prohibits a servicer from providing the written notice more than once during any 180day period. In the preamble to the 2016 Mortgage Servicing Final Rule, the Bureau noted that this 180-day prohibition reduces the risk that the modified written early intervention notice will be used to undermine a borrower’s cease communication right under FDCPA section 805(c). Concurrently with the 2016 Mortgage Servicing Final Rule, the Bureau issued an interpretive rule constituting an advisory opinion under FDCPA section 813(e), 15 U.S.C. 1692k(e), that, in part, interprets the FDCPA cease communication provisions in relation to the written early intervention requirements in Regulation X.10 Specifically, the interpretive rule provides a safe harbor from liability under FDCPA section 805(c) where a servicer that is a debt collector with respect to a mortgage loan is required by § 1024.39(d)(3) to provide a modified written early intervention notice to a borrower who has invoked the cease communication right. After issuing the 2016 Mortgage Servicing Final Rule and the interpretive rule, the Bureau received several inquiries about how § 1024.39(d)(3)(iii) modifies § 1024.39(b)’s timing requirements. Section 1024.39(b) does not require a notice more than once in a 180-day period but, except as otherwise provided in § 1024.39(d)(3)(iii), permits more frequent provision of the written notices. It also provides that, if a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 180 days after the provision of the prior written notice. However, with regard to a loan for which a borrower has invoked the cease communication right as 9 Section 1024.39(d)(3)(i) requires that the notice include a statement that the servicer may or intends to invoke its specified remedy of foreclosure and states that Model clause MS–4(D) in appendix MS– 4 to Regulation X may be used to comply with this requirement. Section 1024.39(d)(3)(ii) provides that the notice may not contain a request for payment. 10 See Bureau of Consumer Fin. Prot., Official Bureau Interpretations: Safe Harbors from Liability under the Fair Debt Collection Practices Act for Certain Actions Taken in Compliance with Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z), 81 FR 71977 (Oct. 19, 2016). E:\FR\FM\16OCR1.SGM 16OCR1 47956 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Rules and Regulations jstallworth on DSKBBY8HB2PROD with RULES described above, § 1024.39(d)(3)(iii) prohibits a servicer from providing the notice more than once in any 180-day period. The Bureau is concerned that, as adopted by the 2016 Mortgage Servicing Final Rule, § 1024.39(d)(3)(iii) imposes too narrow a window for compliance and could provide insufficient guidance as to when and how servicers comply with the timing requirements under certain circumstances. The 180-day prohibition in § 1024.39(d)(3)(iii), read in conjunction with § 1024.39(b), provides only one day for a servicer to provide a subsequent written notice.11 Therefore, where a borrower that has invoked the cease communication right is 45 days or more delinquent at the end of the 180-day period after the servicer provided a prior written notice, a servicer would have to provide the next notice on the 180th calendar day after the prior notice, whether or not this day falls on a Saturday, Sunday, or public holiday. The Bureau narrowly tailored the timing requirements in § 1024.39(d) to prevent a servicer subject to the FDCPA from sending frequent, repeated notices that may undermine a borrower’s cease communication right under section 805(c) of the FDCPA. The Bureau did not, however, intend for servicers subject to § 1024.39(d)(3) to have a one-day window to provide a subsequent written early intervention notice to borrowers who have invoked their cease communication rights. Thus, the Bureau is amending § 1024.39(d)(3)(iii). As amended § 1024.39(d)(3)(iii) retains the general 180-day prohibition but also specifies that, if a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, 11 The Bureau also understands that some stakeholders instead may be interpreting § 1024.39(b) and (d)(3)(iii) together as permitting a servicer to provide the subsequent written notice required by § 1024.39(b) sometime after the 180th day but before the end of the next 180-day period (e.g., by the 360th day). The Bureau does not believe such a reading of § 1024.39(b) and (d)(3)(iii) together is tenable and is concerned that, if servicers act in accordance, borrowers would be deprived of timely receiving important loss mitigation information. VerDate Sep<11>2014 14:58 Oct 13, 2017 Jkt 244001 whichever is later. In effect, the interim final rule provides servicers a 10-day window to provide any required notices at the end of the 180-day period. The Bureau believes that a 10-day window at the end of the 180-day period affords servicers sufficient time to provide the notice while also ensuring that servicers provide the subsequent notice in a timely way, maximizing a borrower’s opportunities to pursue loss mitigation and avoid further delinquency. The Bureau seeks comment on whether the interim final rule permits servicers to timely provide the notice at the end of the 180-day period. The Bureau also seeks comment on whether the interim final rule adequately protects consumers who have invoked their cease communication rights while affording them timely access to information about loss mitigation. VI. Effective Date Section 1024.39(d), as amended by the 2016 Mortgage Servicing Final Rule, becomes effective October 19, 2017. Thus, this interim final rule, which further amends § 1024.39(d)(3)(iii), also becomes effective October 19, 2017. VII. Dodd-Frank Act Section 1022(b) Analysis In developing this interim final rule, the Bureau has considered the potential benefits, costs, and impacts as required by section 1022(b)(2) of the Dodd-Frank Act. Specifically, section 1022(b)(2) calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of consumer access to consumer financial products or services, the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act, and the impact on consumers in rural areas. In addition, 12 U.S.C. 5512(b)(2)(B) directs the Bureau to consult, before and during the rulemaking, with appropriate prudential regulators or other Federal agencies, regarding consistency with the objectives those agencies administer. The Bureau consulted, or offered to consult with, the prudential regulators, the Securities and Exchange Commission, the Department of Housing and Urban Development (HUD), the HUD Office of Inspector General, the Federal Housing Finance Agency, the Federal Trade Commission, the Department of the Treasury, the Department of Agriculture, and the Department of Veterans Affairs, including regarding consistency with any prudential, market, or systemic PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 objectives administered by these agencies. The Bureau previously considered the benefits, costs, and impacts of the 2016 Mortgage Servicing Final Rule’s major provisions.12 The baseline 13 for this discussion is the mortgage servicing market as it would exist ‘‘but for’’ this interim final rule; that is, the Bureau considers the benefits, costs, and impacts of this interim final rule on consumers and covered persons relative to the baseline established by the 2016 Mortgage Servicing Final Rule. In considering the relevant potential benefits, costs, and impacts of this interim final rule, the Bureau has used feedback received to date and has applied its knowledge and expertise concerning consumer financial markets. The discussion below of these potential costs, benefits, and impacts is qualitative, reflecting both the specialized nature of the amendments and the fact that the 2016 Mortgage Servicing Final Rule, which establishes the baseline for the Bureau’s analysis, is not yet in effect. The Bureau requests comment on this discussion generally as well as the submission of data or other information that could inform the Bureau’s consideration of the potential benefits, costs, and impacts of the interim final rule. The interim final rule’s provisions generally would decrease burden incurred by industry participants by modifying the timing requirements for certain disclosures required under the 2016 Mortgage Servicing Final Rule. As is described in more detail below, the Bureau does not believe that these changes would have a significant enough impact on consumers or covered persons to affect consumer access to consumer financial products and services. Timing of written early intervention notice for borrowers who have invoked their cease communication rights under the FDCPA. The interim final rule revises § 1024.39(d)(3)(iii) to specify when a servicer must provide the modified written early intervention notice, as required by § 1024.39(b) and (d), at the end of the 180-day period after the servicer provided a prior written notice. Section 1024.39(b) requires that a servicer must provide a written early intervention notice to certain borrowers no more than 180 days after the servicer previously provided the notice. Section 1024.39(d) 12 81 FR 72160, 72351 (Oct. 19, 2016). Bureau has discretion in any rulemaking to choose an appropriate scope of analysis with respect to potential benefits, costs, and impacts and an appropriate baseline. 13 The E:\FR\FM\16OCR1.SGM 16OCR1 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Rules and Regulations jstallworth on DSKBBY8HB2PROD with RULES generally provides that servicers that are subject to the FDCPA with respect to borrowers who have invoked their cease communication rights pursuant to section 805(c) of the FDCPA must provide a modified written early intervention notice to those borrowers under certain circumstances. As originally adopted § 1024.39(d)(3)(iii) would have provided that a servicer may not provide the modified notice more than once during any 180-day period. Currently, the 180-day prohibition in § 1024.39(d)(3)(iii), read in conjunction with § 1024.39(b), provides only one day for a servicer to provide a subsequent written notice. Under the interim final rule, revised § 1024.39(d)(3)(iii) gives servicers a 10day window to provide the required notices at the end of the 180-day period.14 This provision will benefit covered persons by modifying the timing requirements for the early intervention notice and providing more than a one-day window. This will benefit servicers by providing additional flexibility in the timing for providing these notices. The interim final rule may have the effect of delaying the date on which some borrowers receive written early intervention information about loss mitigation options. However, this delay in no case exceeds 10 days, and will affect only a limited subset of delinquent borrowers: Those who have invoked their FDCPA cease communication rights and are 45 days or more delinquent at the end of the 180-day period following provision of a prior written early intervention notice. Given that servicers may not be subject to the FDCPA with respect to many of the loans they service and that many borrowers will not choose to invoke the FDCPA’s cease communication rights, the Bureau expects that the number of affected borrowers is small.15 Given that 14 In particular, revised § 1024.39(d)(3)(iii) would retain the 180-day prohibition but would also specify: (1) If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice, and (2) if a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. 15 Borrowers generally have FDCPA protections only with respect to debt collectors. A servicer is not considered a debt collector for purposes of the FDCPA based on acquiring servicing rights to a mortgage loan before the mortgage loan is in default. Therefore, if a servicer obtains servicing rights to a mortgage loan and the borrower subsequently goes into default on that mortgage VerDate Sep<11>2014 14:58 Oct 13, 2017 Jkt 244001 the delay under the interim final rule is limited and would likely apply to only a small subset of borrowers, the Bureau does not anticipate that the overall effect on consumers will be significant. Potential specific impacts of the interim final rule. The Bureau believes that a large fraction of depository institutions and credit unions with $10 billion or less in total assets that are engaged in servicing mortgage loans qualify as ‘‘small servicers’’ for purposes of the mortgage servicing rules because they service 5,000 or fewer loans, all of which they or an affiliate own or originated. Small servicers are not subject to Regulation X § 1024.39, and so are not affected by the amendments in this interim final rule. With respect to servicers that are not small servicers as defined in § 1026.41(e)(4), the Bureau believes that the consideration of benefits and costs of covered persons presented above provides a largely accurate analysis of the impacts of the final rule on depository institutions and credit unions with $10 billion or less in total assets that are engaged in servicing mortgage loans. The Bureau has no reason to believe that the additional timing flexibility offered to covered persons by this interim final rule would differentially impact consumers in rural areas. The Bureau requests comment regarding the impact of the amended provisions on consumers in rural areas and how those impacts may differ from those experienced by consumers generally. VIII. Regulatory Flexibility Act Analysis Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.16 IX. Paperwork Reduction Act Under the Paperwork Reduction Act of 1995 (PRA),17 Federal agencies are generally required to seek Office of Management and Budget (OMB) approval for information collection requirements prior to implementation. The collections of information related to the 2016 Mortgage Servicing Final Rule have been reviewed and approved by OMB previously in accordance with the PRA and assigned OMB Control Numbers 3170–0016 (Regulation X) and 3170–0015 (Regulation Z). Under the PRA, the Bureau may not conduct or loan, the servicer generally is not covered by the FDCPA with respect to that mortgage loan based on its servicing of that loan. 16 5 U.S.C. 603(a), 604(a). 17 44 U.S.C. 3501 et seq. PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 47957 sponsor and, notwithstanding any other provision of law, a person is not required to respond to an information collection unless the information collection displays a valid control number assigned by OMB. The Bureau has determined that the interim final rule will provide firms with additional flexibility and clarity with respect to what must be disclosed under the 2016 Mortgage Servicing Final Rule; therefore, it will have only minimal impact on the industry-wide aggregate PRA burden relative to the baseline. The Bureau welcomes comments on this determination or any other aspects of this interim final rule for purposes of the PRA. Comments should be submitted to the Bureau as instructed in the ADDRESSES part of this document and to the attention of the Paperwork Reduction Act Officer. All comments will become a matter of public record. List of Subjects in 12 CFR Part 1024 Condominiums, Consumer protection, Housing, Insurance, Mortgages, Mortgagees, Mortgage servicing, Reporting and recordkeeping requirements. Authority and Issuance For the reasons set forth in the preamble, the Consumer Financial Protection Bureau amends 12 CFR part 1024 as follows: PART 1024—REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X) 1. The authority citation for part 1024 continues to read as follows: ■ Authority: 12 U.S.C. 2603–2605, 2607, 2609, 2617, 5512, 5532, 5581. Subpart C—Mortgage Servicing 2. Amend § 1024.39 by revising paragraph (d)(3)(iii) to read as follows: ■ § 1024.39 Early intervention requirements for certain borrowers. * * * * * (d) * * * (3) * * * (iii) A servicer is prohibited from providing the written notice more than once during any 180-day period. If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer E:\FR\FM\16OCR1.SGM 16OCR1 47958 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Rules and Regulations must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. Dated: October 2, 2017. Richard Cordray, Director, Bureau of Consumer Financial Protection. [FR Doc. 2017–21912 Filed 10–13–17; 8:45 am] BILLING CODE 4810–AM–P SMALL BUSINESS ADMINISTRATION 13 CFR Part 120 Express Bridge Loan Pilot Program; Modification of Lending Criteria U.S. Small Business Administration. ACTION: Notification of Express Bridge Loan Pilot Program and impact on regulatory provision. AGENCY: The U.S. Small Business Administration (SBA) announces SBA’s Express Bridge Loan Pilot Program (Express Bridge Pilot), as described in this document, and its impact on an Agency regulation relating to loan underwriting for loans made under the Express Bridge Pilot. This pilot will provide expedited guaranteed bridge loan financing for disaster-related purposes to small businesses located in communities impacted by a Presidentially-declared disaster, while those small businesses apply for and await long-term financing (including through SBA’s direct disaster loan program, if eligible). The modification of the lending criteria will minimize the burden on businesses applying for loans through the Express Bridge Pilot and provide an incentive for SBA Express lenders to participate in the pilot. DATES: The Express Bridge Pilot, including the modification of lending criteria under 13 CFR 120.150, will be available from October 16, 2017, through September 30, 2020. FOR FURTHER INFORMATION CONTACT: Dianna Seaborn, Director, Office of Financial Assistance, U.S. Small Business Administration, 409 Third Street SW., Washington, DC 20416; Telephone (202) 205–3645; email address: dianna.seaborn@sba.gov. SUPPLEMENTARY INFORMATION: Pursuant to its authority under the Small Business Act, SBA provides assistance to small businesses located in the communities affected by Presidentiallydeclared disasters. The Agency has announced an initiative called the jstallworth on DSKBBY8HB2PROD with RULES SUMMARY: VerDate Sep<11>2014 14:58 Oct 13, 2017 Jkt 244001 Express Bridge Pilot, which is designed to supplement the Agency’s disaster response capabilities. The Express Bridge Pilot will authorize the Agency’s 7(a) Lenders with SBA Express lending authority to deliver expedited SBAguaranteed financing on an emergency basis for disaster-related purposes to small businesses located in these communities while the businesses apply for and await long-term financing (including through SBA’s direct disaster loan program, if eligible). The Express Bridge Pilot will apply the policies and procedures in place for the Agency’s SBA Express program, except as outlined in this document, and include the following: (1) The maximum loan amount under the pilot is $25,000 and the loans will carry a 50 percent guaranty from the Agency. (2) Express Bridge Pilot loans in a particular disaster area can only be made by SBA Express lenders that were participants in the SBA Express program as of the date of the applicable disaster. (3) Eligible small businesses are those that were located, as of the date of the applicable disaster, in the counties that have been Presidentially-declared as disaster areas, plus any contiguous counties. (4) SBA Express lenders may make loans under the Express Bridge Pilot only to eligible small businesses that had an existing banking relationship with the SBA Express lender as of the date of the applicable disaster. A relationship with any of the SBA Express lender’s affiliates will not satisfy this requirement. (5) SBA Express lenders must certify to SBA, for each Express Bridge Pilot loan, that the loan funds will be used to support the survival and/or reopening of the small business within the affected counties. (6) The maximum maturity for an Express Bridge Pilot loan is seven years. The SBA Express lender may require a borrower to pay down or pay off the Express Bridge Pilot loan if the borrower is approved for long-term disaster financing (including an SBA direct disaster loan) that allows proceeds to be used for Express Bridge Pilot loan reimbursement. (7) Express Bridge Pilot loans cannot be sold in SBA’s secondary market. Express Bridge Pilot loans are intended to be interim loans, thus SBA has determined pursuant to 13 CFR 120.612(a)(3) that the sale of such loans in SBA’s secondary market would not be conducive to the successful operation of the secondary market program. PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 (8) Loans under the Express Bridge Pilot in a particular disaster area can only be made up to six months after the date of the applicable Presidential disaster declaration. (9) The Express Bridge Pilot will be available for use starting October 16, 2017, and will expire on September 30, 2020. Express Bridge Pilot loans must be approved on or before such date, as evidenced by the issuance of an SBA loan number. To maximize the effectiveness of the Express Bridge Pilot, SBA is modifying an Agency regulation (13 CFR 120.150) that applies to loans made in the 7(a) Business Loan Program. (SBA uses the term ‘‘modify’’ as contemplated under 13 CFR 120.3.) This modification will also minimize the burdens on the businesses applying for loans through the Express Bridge Pilot and expand the opportunities for SBA Express lenders to participate in the pilot. Under § 120.150 of SBA’s regulations, a small business applicant must be creditworthy and loans must be so sound as to reasonably assure repayment. In making this determination, character, reputation, credit history of the applicant and guarantors, past earnings, projected cash flow, and future prospects, among other things, must be considered. Currently, SBA Express lenders are authorized to make the credit decision using credit analysis processes and procedures (which may include credit scoring) that are consistent with those used for their similarly-sized non-SBA guaranteed commercial loans. In order to streamline the loan underwriting process for the Express Bridge Pilot, SBA is modifying the requirements of 13 CFR 120.150 to allow SBA Express lenders to underwrite Express Bridge Pilot loans by considering only the following: (1) A minimum acceptable credit score of 130 for the applicant issued by E-Tran upon submission of the loan application for screening; (2) a personal credit score for each guarantor; and (3) Lender must obtain a signed IRS Form 4506–T and an IRS tax transcript. For businesses in operation prior to the disaster but not long enough to have been required to file a tax return, Lender must provide an alternative to verify existence of the business. The screening credit score is a FICO® Small Business Scoring ServiceSM Score. SBA may adjust the minimum acceptable credit score up or down from time to time during the pilot, and will post any such adjusted score on its Web site at www.sba.gov/for-lenders. E:\FR\FM\16OCR1.SGM 16OCR1

Agencies

BUREAU OF CONSUMER FINANCIAL PROTECTION

[Federal Register Volume 82, Number 198 (Monday, October 16, 2017)]
[Rules and Regulations]
[Pages 47953-47958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21912]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

========================================================================


Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / 
Rules and Regulations

[[Page 47953]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1024

[Docket No. CFPB-2017-0031]
RIN 3170-AA77


Mortgage Servicing Rules Under the Real Estate Settlement 
Procedures Act (Regulation X)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interim final rule with request for public comment.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing an interim final rule amending a provision of the Regulation X 
mortgage servicing rules issued in 2016 relating to the timing for 
servicers to provide modified written early intervention notices to 
borrowers who have invoked their cease communication rights under the 
Fair Debt Collection Practices Act. The Bureau requests public comment 
on this interim final rule.

DATES: This interim final rule is effective on October 19, 2017. 
Comments must be received on or before November 15, 2017.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2017-
0031 or RIN 3170-AA77, by any of the following methods:
     Email: FederalRegisterComments@cfpb.gov. Include Docket 
No. CFPB-2017-0031 or RIN 3170-AA77 in the subject line of the email.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 
20552.
     Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1700 G 
Street NW., Washington, DC 20552.
    Instructions: All submissions should include the agency name and 
docket number or Regulatory Information Number (RIN) for this 
rulemaking. Because paper mail in the Washington, DC area and at the 
Bureau is subject to delay, commenters are encouraged to submit 
comments electronically. In general, all comments received will be 
posted without change to https://www.regulations.gov. In addition, 
comments will be available for public inspection and copying at 1700 G 
Street NW., Washington, DC 20552, on official business days between the 
hours of 10 a.m. and 5:00 p.m. Eastern Time. You can make an 
appointment to inspect the documents by telephoning 202-435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or Social 
Security numbers, should not be included. Comments will not be edited 
to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Joel L. Singerman, Counsel; or William 
R. Corbett or Laura A. Johnson, Senior Counsels, Office of Regulations, 
at 202-435-7700 or https://reginquiries.consumerfinance.gov/.

SUPPLEMENTARY INFORMATION: 

I. Summary of the Interim Final Rule

    On August 4, 2016, the Bureau issued the Amendments to the 2013 
Mortgage Rules Under the Real Estate Settlement Procedures Act 
(Regulation X) and the Truth in Lending Act (Regulation Z) (2016 
Mortgage Servicing Final Rule) amending certain of the Bureau's 
mortgage servicing rules.\1\ The Bureau has learned, through its 
outreach in support of industry's implementation of the 2016 Mortgage 
Servicing Final Rule, that certain technical aspects of the rule 
relating to the timing for servicers to provide modified written early 
intervention notices to borrowers who have invoked their cease 
communication rights under the Fair Debt Collection Practices Act 
(FDCPA) may create unintended challenges in implementation. To 
alleviate any unintended challenges and facilitate timely provision of 
written early intervention notices to these borrowers, the Bureau is 
issuing this interim final rule to address the provision in Regulation 
X, which would otherwise become effective October 19, 2017.\2\
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    \1\ 81 FR 72160 (Oct. 19, 2016).
    \2\ The Bureau is addressing in a separate proposed rule another 
disclosure timing provision of the 2016 Mortgage Servicing Final 
Rule that would otherwise become effective April 19, 2018.
---------------------------------------------------------------------------

    Among other things, the 2016 Mortgage Servicing Final Rule 
addresses Regulation X's provision regarding early intervention 
requirements when a borrower has invoked the cease communication right 
under the FDCPA.\3\ Under that provision (and with certain exceptions 
not applicable here), a servicer subject to the FDCPA with respect to 
that borrower's loan must provide a modified written early intervention 
notice to that borrower on a periodic basis but is prohibited from 
doing so more than once during any 180-day period.
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    \3\ The provisions of Regulation X discussed herein were amended 
by the 2016 Mortgage Servicing Final Rule but are not effective 
until October 19, 2017. To simplify review of this document and 
differentiate between those amendments and this rule, this document 
generally refers to the 2016 amendments as though they already are 
in effect.
---------------------------------------------------------------------------

    Based on feedback received through its efforts to support industry 
implementation of the 2016 Mortgage Servicing Final Rule, the Bureau 
understands that there is concern among some servicers that this 180-
day prohibition in Sec.  1024.39(d)(3)(iii), read in conjunction with 
the early intervention provision's other timing requirements regarding 
written notices, requires servicers to provide the notice exactly on 
the 180th day after providing a prior notice. The Bureau did not intend 
this result and is concerned that the provision imposes too narrow a 
window for compliance and may provide insufficient guidance as to when 
and how servicers comply with the timing requirements under certain 
circumstances. Thus (and as explained in further detail below), the 
Bureau is issuing this interim final rule to amend Sec.  
1024.39(d)(3)(iii) to give servicers a 10-day window to provide the 
modified notice at the end of the 180-day period.
    The Bureau believes that the interim final rule provides clearer 
and more flexible standards than the timing requirements adopted in the 
2016 Mortgage Servicing Final Rule, offering greater certainty for 
implementation and compliance, without undermining important borrower 
protections relating

[[Page 47954]]

to early intervention. The Bureau seeks public comment on this interim 
final rule.

II. Background

A. 2016 Mortgage Servicing Final Rule and Implementation Support

    In August 2016, the Bureau issued the 2016 Mortgage Servicing Final 
Rule, which amends certain of the Bureau's mortgage servicing rules in 
Regulations X and Z.\4\ Most of these rules become effective on October 
19, 2017, except that the provisions relating to bankruptcy periodic 
statements and successors in interest become effective on April 19, 
2018. The Bureau has worked to support implementation by providing an 
updated compliance guide, other implementation aids, a technical 
corrections final rule,\5\ policy guidance regarding early 
compliance,\6\ and informal guidance in response to regulatory 
inquiries. Information regarding the Bureau's implementation support 
initiative and available implementation resources can be found on the 
Bureau's regulatory implementation Web site at https://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/mortserv/. Based on its ongoing outreach, the Bureau believes 
that industry has made substantial implementation progress regarding 
the 2016 Mortgage Servicing Final Rule. However, as discussed herein, 
the Bureau believes that a limited disclosure timing provision under 
Regulation X from the 2016 Mortgage Servicing Final Rule may pose 
unintended implementation challenges and is appropriate to address in 
an interim final rule before it goes into effect.
---------------------------------------------------------------------------

    \4\ 81 FR 72160 (Oct. 19, 2016). The amendments cover nine major 
topics and focus primarily on clarifying, revising, or amending 
provisions regarding force-placed insurance notices, policies and 
procedures, early intervention, and loss mitigation requirements 
under Regulation X's servicing provisions; and prompt crediting and 
periodic statement requirements under Regulation Z's servicing 
provisions. The amendments also address proper compliance regarding 
certain servicing requirements when a person is a potential or 
confirmed successor in interest, is a debtor in bankruptcy, or sends 
a cease communication request under the FDCPA.
    \5\ Amendments to the 2013 Mortgage Rules Under the Real Estate 
Settlement Procedures Act (Regulation X) and the Truth in Lending 
Act (Regulation Z); Correction, 82 FR 30947 (July 5, 2017).
    \6\ Policy Guidance on Supervisory and Enforcement Priorities 
Regarding Early Compliance With the 2016 Amendments to the 2013 
Mortgage Rules Under the Real Estate Settlement Procedures Act 
(Regulation X) and the Truth in Lending Act (Regulation Z), 82 FR 
29713 (June 30, 2017).
---------------------------------------------------------------------------

B. Purpose and Scope of Interim Final Rule

    As a result of feedback and questions received from servicers, the 
Bureau has decided to issue an interim final rule amending Regulation X 
relating to the timing for servicers to provide modified written early 
intervention notices to borrowers who have invoked their cease 
communication rights under the FDCPA. The Bureau believes this interim 
final rule provides clearer and more flexible standards than the timing 
requirements adopted in the 2016 Mortgage Servicing Final Rule, 
offering greater certainty for implementation and compliance, while 
also not undermining borrower protections.

III. Legal Authority

    The Bureau is issuing this interim final rule pursuant to its 
authority under RESPA and the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act),\7\ including the authorities 
discussed below. This interim final rule amends a provision previously 
adopted by the Bureau in the 2016 Mortgage Servicing Final Rule. In 
doing so, the Bureau relied on one or more of the authorities discussed 
below, as well as other authority. The Bureau is issuing this interim 
final rule in reliance on the same authority and for the same reasons 
relied on in adopting the relevant provisions of the 2016 Mortgage 
Servicing Final Rule, as discussed in detail in the Legal Authority and 
Section-by-Section Analysis parts of the 2016 Mortgage Servicing Final 
Rule.
---------------------------------------------------------------------------

    \7\ Public Law 111-203, 1245 Stat. 11376 (2010).
---------------------------------------------------------------------------

A. RESPA

    Section 19(a) of RESPA, 12 U.S.C. 2617(a), authorizes the Bureau to 
prescribe such rules and regulations, to make such interpretations, and 
to grant such reasonable exemptions for classes of transactions, as may 
be necessary to achieve the purposes of RESPA, which include its 
consumer protection purposes. In addition, section 6(j)(3) of RESPA, 12 
U.S.C. 2605(j)(3), authorizes the Bureau to establish any requirements 
necessary to carry out section 6 of RESPA, and section 6(k)(1)(E) of 
RESPA, 12 U.S.C. 2605(k)(1)(E), authorizes the Bureau to prescribe 
regulations that are appropriate to carry out RESPA's consumer 
protection purposes. The amendments or clarifications to Regulation X 
in the interim final rule are intended to achieve some or all these 
purposes.

B. The Dodd-Frank Act

    Section 1022(b)(1) of the Dodd-Frank Act, 12 U.S.C. 5512(b)(1), 
authorizes the Bureau to prescribe rules ``as may be necessary or 
appropriate to enable the Bureau to administer and carry out the 
purposes and objectives of the Federal consumer financial laws, and to 
prevent evasions thereof.'' RESPA and title X of the Dodd-Frank Act are 
Federal consumer financial laws.
    Section 1032(a) of the Dodd-Frank Act, 12 U.S.C. 5532(a), provides 
that the Bureau ``may prescribe rules to ensure that the features of 
any consumer financial product or service, both initially and over the 
term of the product or service, are fully, accurately, and effectively 
disclosed to consumers in a manner that permits consumers to understand 
the costs, benefits, and risks associated with the product or service, 
in light of the facts and circumstances.'' The authority granted to the 
Bureau in section 1032(a) of the Dodd-Frank Act is broad and empowers 
the Bureau to prescribe rules regarding the disclosure of the 
``features'' of consumer financial products and services generally. 
Accordingly, the Bureau may prescribe rules containing disclosure 
requirements even if other Federal consumer financial laws do not 
specifically require disclosure of such features.
    Section 1032(c) of the Dodd-Frank Act, 12 U.S.C. 5532(c), provides 
that, in prescribing rules pursuant to section 1032 of the Dodd-Frank 
Act, the Bureau ``shall consider available evidence about consumer 
awareness, understanding of, and responses to disclosures or 
communications about the risks, costs, and benefits of consumer 
financial products or services.'' Accordingly, in issuing the interim 
final rule to amend provisions authorized under section 1032(a) of the 
Dodd-Frank Act, the Bureau has considered available studies, reports, 
and other evidence about consumer awareness, understanding of, and 
responses to disclosures or communications about the risks, costs, and 
benefits of consumer financial products or services.

IV. Administrative Procedure Act

    To the extent that notice and comment would otherwise be required, 
the Bureau finds that there is good cause to publish this interim final 
rule without notice and comment and for the rule to be effective less 
than 30 days after publication. See 5 U.S.C. 553(b)(3)(B), (d)(3). As 
explained elsewhere in this rule, the Bureau has heard concerns from 
servicers that the 180-day prohibition in current

[[Page 47955]]

Sec.  1024.39(d)(3)(iii) requires them to provide the modified early 
intervention notice to delinquent borrowers who have invoked their 
right to cease communication under the FDCPA exactly on the 180th day 
after providing a prior notice. The Bureau did not intend this result 
and is concerned that current Sec.  1024.39(d)(3)(iii) imposes too 
narrow a window for compliance and could cause legal risk for 
servicers, particularly when the 180th day falls on a Saturday, Sunday, 
or public holiday. This interim final rule amends Sec.  
1024.39(d)(3)(iii) to give servicers a 10-day window to provide the 
modified notice at the end of the 180-day period. The Bureau believes 
that this amendment will offer greater certainty for implementation and 
compliance, while also not undermining borrower protections. The Bureau 
finds that it would be impracticable to provide notice and comment 
before finalizing this rule because Sec.  1024.39(d)(3)(iii) would 
otherwise become effective on October 19, 2017, and could cause 
unintended challenges in the implementation of the notice requirement. 
For similar reasons, the Bureau finds that it is impracticable to 
provide a 30-day period between publication of this rule and its 
effective date. The Bureau is requesting comment on this rule. Based on 
any comments received (and mindful of the need to avoid market 
disruption), the Bureau will consider whether to revisit this rule.

V. Section-by-Section Analysis

A. Regulation X

Section 1024.39 Early Intervention Requirements for Certain Borrowers
39(d) Fair Debt Collection Practices Act--Partial Exemption
39(d)(3).
    In this interim final rule, the Bureau is amending Sec.  
1024.39(d)(3)(iii) to specify in more detail when a servicer must 
provide the modified written early intervention notice, as required by 
Sec.  1024.39(b) and (d), at the end of the 180-day period after the 
servicer provided a prior written notice. In general, Sec.  1024.39(d) 
provides a partial exemption from the early intervention requirements 
for servicers that are subject to the FDCPA with respect to borrowers 
who have invoked their cease communication rights pursuant to section 
805(c) of the FDCPA.\8\ Section 1024.39(d)(3) requires servicers to 
provide a modified written early intervention notice to those borrowers 
under certain circumstances, but Sec.  1024.39(d)(3)(iii) prohibits a 
servicer from providing the modified notice more than once during any 
180-day period. As revised under this interim final rule, Sec.  
1024.39(d)(3)(iii) gives servicers a 10-day window to provide the 
required notices at the end of the 180-day period. In particular, 
revised Sec.  1024.39(d)(3)(iii) retains the 180-day prohibition and 
also specifies: (1) If a borrower is 45 days or more delinquent at the 
end of any 180-day period after the servicer has provided the written 
notice, a servicer must provide the written notice again no later than 
190 days after the provision of the prior written notice, and (2) if a 
borrower is less than 45 days delinquent at the end of any 180-day 
period after the servicer has provided the written notice, a servicer 
must provide the written notice again no later than 45 days after the 
payment due date for which the borrower remains delinquent or 190 days 
after the provision of the prior written notice, whichever is later.
---------------------------------------------------------------------------

    \8\ This section-by-section analysis discusses Sec.  1024.39(d) 
generally in terms of a borrower's cease communication notification 
and its effect on a servicer's obligations under the early 
intervention requirements, but the provision applies equally to a 
borrower's notice to the servicer that the borrower refuses to pay a 
debt. See FDCPA section 805(c) (``If a consumer notifies a debt 
collector in writing that the consumer refuses to pay a debt or that 
the consumer wishes the debt collector to cease further 
communication with the consumer, the debt collector shall not 
communicate further with the consumer with respect to such debt . . 
. .'').
---------------------------------------------------------------------------

    Section 1024.39(b) generally requires that a servicer provide a 
written early intervention notice prior to the 45th day of delinquency, 
and again no later than 45 days after each payment due date so long as 
the borrower remains delinquent. Section 1024.39(b) further provides 
that a servicer is not required to provide a notice more than once in 
any 180-day period, but also that a servicer must provide the written 
notice no more than 180 days after the servicer has previously provided 
the notice if the borrower remains delinquent and is 45 days or more 
delinquent at the end of the 180-day period.
    Among other things, Sec.  1024.39(d) modifies the timing 
requirements for providing the written notice required by Sec.  
1024.39(b) when a borrower has invoked the cease communication right 
under the FDCPA. Under Sec.  1024.39(d)(2), a servicer subject to the 
FDCPA with respect to that borrower's loan is exempt from the written 
notice requirements of Sec.  1024.39(b), but only if no loss mitigation 
option is available, or while any borrower on that mortgage loan is a 
debtor in bankruptcy. If neither of those conditions is met, Sec.  
1024.39(d)(3) provides that the servicer must comply with the written 
notice requirements of Sec.  1024.39(b), as modified by Sec.  
1024.39(d)(3)(i) through (iii).\9\ The relevant provision for purposes 
of this interim final rule is Sec.  1024.39(d)(3)(iii), which prohibits 
a servicer from providing the written notice more than once during any 
180-day period. In the preamble to the 2016 Mortgage Servicing Final 
Rule, the Bureau noted that this 180-day prohibition reduces the risk 
that the modified written early intervention notice will be used to 
undermine a borrower's cease communication right under FDCPA section 
805(c).
---------------------------------------------------------------------------

    \9\ Section 1024.39(d)(3)(i) requires that the notice include a 
statement that the servicer may or intends to invoke its specified 
remedy of foreclosure and states that Model clause MS-4(D) in 
appendix MS-4 to Regulation X may be used to comply with this 
requirement. Section 1024.39(d)(3)(ii) provides that the notice may 
not contain a request for payment.
---------------------------------------------------------------------------

    Concurrently with the 2016 Mortgage Servicing Final Rule, the 
Bureau issued an interpretive rule constituting an advisory opinion 
under FDCPA section 813(e), 15 U.S.C. 1692k(e), that, in part, 
interprets the FDCPA cease communication provisions in relation to the 
written early intervention requirements in Regulation X.\10\ 
Specifically, the interpretive rule provides a safe harbor from 
liability under FDCPA section 805(c) where a servicer that is a debt 
collector with respect to a mortgage loan is required by Sec.  
1024.39(d)(3) to provide a modified written early intervention notice 
to a borrower who has invoked the cease communication right.
---------------------------------------------------------------------------

    \10\ See Bureau of Consumer Fin. Prot., Official Bureau 
Interpretations: Safe Harbors from Liability under the Fair Debt 
Collection Practices Act for Certain Actions Taken in Compliance 
with Mortgage Servicing Rules under the Real Estate Settlement 
Procedures Act (Regulation X) and the Truth in Lending Act 
(Regulation Z), 81 FR 71977 (Oct. 19, 2016).
---------------------------------------------------------------------------

    After issuing the 2016 Mortgage Servicing Final Rule and the 
interpretive rule, the Bureau received several inquiries about how 
Sec.  1024.39(d)(3)(iii) modifies Sec.  1024.39(b)'s timing 
requirements. Section 1024.39(b) does not require a notice more than 
once in a 180-day period but, except as otherwise provided in Sec.  
1024.39(d)(3)(iii), permits more frequent provision of the written 
notices. It also provides that, if a borrower is 45 days or more 
delinquent at the end of any 180-day period after the servicer has 
provided the written notice, a servicer must provide the written notice 
again no later than 180 days after the provision of the prior written 
notice. However, with regard to a loan for which a borrower has invoked 
the cease communication right as

[[Page 47956]]

described above, Sec.  1024.39(d)(3)(iii) prohibits a servicer from 
providing the notice more than once in any 180-day period.
    The Bureau is concerned that, as adopted by the 2016 Mortgage 
Servicing Final Rule, Sec.  1024.39(d)(3)(iii) imposes too narrow a 
window for compliance and could provide insufficient guidance as to 
when and how servicers comply with the timing requirements under 
certain circumstances. The 180-day prohibition in Sec.  
1024.39(d)(3)(iii), read in conjunction with Sec.  1024.39(b), provides 
only one day for a servicer to provide a subsequent written notice.\11\ 
Therefore, where a borrower that has invoked the cease communication 
right is 45 days or more delinquent at the end of the 180-day period 
after the servicer provided a prior written notice, a servicer would 
have to provide the next notice on the 180th calendar day after the 
prior notice, whether or not this day falls on a Saturday, Sunday, or 
public holiday. The Bureau narrowly tailored the timing requirements in 
Sec.  1024.39(d) to prevent a servicer subject to the FDCPA from 
sending frequent, repeated notices that may undermine a borrower's 
cease communication right under section 805(c) of the FDCPA. The Bureau 
did not, however, intend for servicers subject to Sec.  1024.39(d)(3) 
to have a one-day window to provide a subsequent written early 
intervention notice to borrowers who have invoked their cease 
communication rights. Thus, the Bureau is amending Sec.  
1024.39(d)(3)(iii).
---------------------------------------------------------------------------

    \11\ The Bureau also understands that some stakeholders instead 
may be interpreting Sec.  1024.39(b) and (d)(3)(iii) together as 
permitting a servicer to provide the subsequent written notice 
required by Sec.  1024.39(b) sometime after the 180th day but before 
the end of the next 180-day period (e.g., by the 360th day). The 
Bureau does not believe such a reading of Sec.  1024.39(b) and 
(d)(3)(iii) together is tenable and is concerned that, if servicers 
act in accordance, borrowers would be deprived of timely receiving 
important loss mitigation information.
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    As amended Sec.  1024.39(d)(3)(iii) retains the general 180-day 
prohibition but also specifies that, if a borrower is 45 days or more 
delinquent at the end of any 180-day period after the servicer has 
provided the written notice, a servicer must provide the written notice 
again no later than 190 days after the provision of the prior written 
notice. If a borrower is less than 45 days delinquent at the end of any 
180-day period after the servicer has provided the written notice, a 
servicer must provide the written notice again no later than 45 days 
after the payment due date for which the borrower remains delinquent or 
190 days after the provision of the prior written notice, whichever is 
later. In effect, the interim final rule provides servicers a 10-day 
window to provide any required notices at the end of the 180-day 
period. The Bureau believes that a 10-day window at the end of the 180-
day period affords servicers sufficient time to provide the notice 
while also ensuring that servicers provide the subsequent notice in a 
timely way, maximizing a borrower's opportunities to pursue loss 
mitigation and avoid further delinquency.
    The Bureau seeks comment on whether the interim final rule permits 
servicers to timely provide the notice at the end of the 180-day 
period. The Bureau also seeks comment on whether the interim final rule 
adequately protects consumers who have invoked their cease 
communication rights while affording them timely access to information 
about loss mitigation.

VI. Effective Date

    Section 1024.39(d), as amended by the 2016 Mortgage Servicing Final 
Rule, becomes effective October 19, 2017. Thus, this interim final 
rule, which further amends Sec.  1024.39(d)(3)(iii), also becomes 
effective October 19, 2017.

VII. Dodd-Frank Act Section 1022(b) Analysis

    In developing this interim final rule, the Bureau has considered 
the potential benefits, costs, and impacts as required by section 
1022(b)(2) of the Dodd-Frank Act. Specifically, section 1022(b)(2) 
calls for the Bureau to consider the potential benefits and costs of a 
regulation to consumers and covered persons, including the potential 
reduction of consumer access to consumer financial products or 
services, the impact on depository institutions and credit unions with 
$10 billion or less in total assets as described in section 1026 of the 
Dodd-Frank Act, and the impact on consumers in rural areas. In 
addition, 12 U.S.C. 5512(b)(2)(B) directs the Bureau to consult, before 
and during the rulemaking, with appropriate prudential regulators or 
other Federal agencies, regarding consistency with the objectives those 
agencies administer. The Bureau consulted, or offered to consult with, 
the prudential regulators, the Securities and Exchange Commission, the 
Department of Housing and Urban Development (HUD), the HUD Office of 
Inspector General, the Federal Housing Finance Agency, the Federal 
Trade Commission, the Department of the Treasury, the Department of 
Agriculture, and the Department of Veterans Affairs, including 
regarding consistency with any prudential, market, or systemic 
objectives administered by these agencies.
    The Bureau previously considered the benefits, costs, and impacts 
of the 2016 Mortgage Servicing Final Rule's major provisions.\12\ The 
baseline \13\ for this discussion is the mortgage servicing market as 
it would exist ``but for'' this interim final rule; that is, the Bureau 
considers the benefits, costs, and impacts of this interim final rule 
on consumers and covered persons relative to the baseline established 
by the 2016 Mortgage Servicing Final Rule.
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    \12\ 81 FR 72160, 72351 (Oct. 19, 2016).
    \13\ The Bureau has discretion in any rulemaking to choose an 
appropriate scope of analysis with respect to potential benefits, 
costs, and impacts and an appropriate baseline.
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    In considering the relevant potential benefits, costs, and impacts 
of this interim final rule, the Bureau has used feedback received to 
date and has applied its knowledge and expertise concerning consumer 
financial markets. The discussion below of these potential costs, 
benefits, and impacts is qualitative, reflecting both the specialized 
nature of the amendments and the fact that the 2016 Mortgage Servicing 
Final Rule, which establishes the baseline for the Bureau's analysis, 
is not yet in effect. The Bureau requests comment on this discussion 
generally as well as the submission of data or other information that 
could inform the Bureau's consideration of the potential benefits, 
costs, and impacts of the interim final rule.
    The interim final rule's provisions generally would decrease burden 
incurred by industry participants by modifying the timing requirements 
for certain disclosures required under the 2016 Mortgage Servicing 
Final Rule. As is described in more detail below, the Bureau does not 
believe that these changes would have a significant enough impact on 
consumers or covered persons to affect consumer access to consumer 
financial products and services.
    Timing of written early intervention notice for borrowers who have 
invoked their cease communication rights under the FDCPA. The interim 
final rule revises Sec.  1024.39(d)(3)(iii) to specify when a servicer 
must provide the modified written early intervention notice, as 
required by Sec.  1024.39(b) and (d), at the end of the 180-day period 
after the servicer provided a prior written notice. Section 1024.39(b) 
requires that a servicer must provide a written early intervention 
notice to certain borrowers no more than 180 days after the servicer 
previously provided the notice. Section 1024.39(d)

[[Page 47957]]

generally provides that servicers that are subject to the FDCPA with 
respect to borrowers who have invoked their cease communication rights 
pursuant to section 805(c) of the FDCPA must provide a modified written 
early intervention notice to those borrowers under certain 
circumstances. As originally adopted Sec.  1024.39(d)(3)(iii) would 
have provided that a servicer may not provide the modified notice more 
than once during any 180-day period. Currently, the 180-day prohibition 
in Sec.  1024.39(d)(3)(iii), read in conjunction with Sec.  1024.39(b), 
provides only one day for a servicer to provide a subsequent written 
notice.
    Under the interim final rule, revised Sec.  1024.39(d)(3)(iii) 
gives servicers a 10-day window to provide the required notices at the 
end of the 180-day period.\14\ This provision will benefit covered 
persons by modifying the timing requirements for the early intervention 
notice and providing more than a one-day window. This will benefit 
servicers by providing additional flexibility in the timing for 
providing these notices.
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    \14\ In particular, revised Sec.  1024.39(d)(3)(iii) would 
retain the 180-day prohibition but would also specify: (1) If a 
borrower is 45 days or more delinquent at the end of any 180-day 
period after the servicer has provided the written notice, a 
servicer must provide the written notice again no later than 190 
days after the provision of the prior written notice, and (2) if a 
borrower is less than 45 days delinquent at the end of any 180-day 
period after the servicer has provided the written notice, a 
servicer must provide the written notice again no later than 45 days 
after the payment due date for which the borrower remains delinquent 
or 190 days after the provision of the prior written notice, 
whichever is later.
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    The interim final rule may have the effect of delaying the date on 
which some borrowers receive written early intervention information 
about loss mitigation options. However, this delay in no case exceeds 
10 days, and will affect only a limited subset of delinquent borrowers: 
Those who have invoked their FDCPA cease communication rights and are 
45 days or more delinquent at the end of the 180-day period following 
provision of a prior written early intervention notice. Given that 
servicers may not be subject to the FDCPA with respect to many of the 
loans they service and that many borrowers will not choose to invoke 
the FDCPA's cease communication rights, the Bureau expects that the 
number of affected borrowers is small.\15\ Given that the delay under 
the interim final rule is limited and would likely apply to only a 
small subset of borrowers, the Bureau does not anticipate that the 
overall effect on consumers will be significant.
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    \15\ Borrowers generally have FDCPA protections only with 
respect to debt collectors. A servicer is not considered a debt 
collector for purposes of the FDCPA based on acquiring servicing 
rights to a mortgage loan before the mortgage loan is in default. 
Therefore, if a servicer obtains servicing rights to a mortgage loan 
and the borrower subsequently goes into default on that mortgage 
loan, the servicer generally is not covered by the FDCPA with 
respect to that mortgage loan based on its servicing of that loan.
---------------------------------------------------------------------------

    Potential specific impacts of the interim final rule. The Bureau 
believes that a large fraction of depository institutions and credit 
unions with $10 billion or less in total assets that are engaged in 
servicing mortgage loans qualify as ``small servicers'' for purposes of 
the mortgage servicing rules because they service 5,000 or fewer loans, 
all of which they or an affiliate own or originated. Small servicers 
are not subject to Regulation X Sec.  1024.39, and so are not affected 
by the amendments in this interim final rule.
    With respect to servicers that are not small servicers as defined 
in Sec.  1026.41(e)(4), the Bureau believes that the consideration of 
benefits and costs of covered persons presented above provides a 
largely accurate analysis of the impacts of the final rule on 
depository institutions and credit unions with $10 billion or less in 
total assets that are engaged in servicing mortgage loans.
    The Bureau has no reason to believe that the additional timing 
flexibility offered to covered persons by this interim final rule would 
differentially impact consumers in rural areas. The Bureau requests 
comment regarding the impact of the amended provisions on consumers in 
rural areas and how those impacts may differ from those experienced by 
consumers generally.

VIII. Regulatory Flexibility Act Analysis

    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\16\
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    \16\ 5 U.S.C. 603(a), 604(a).
---------------------------------------------------------------------------

IX. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA),\17\ Federal 
agencies are generally required to seek Office of Management and Budget 
(OMB) approval for information collection requirements prior to 
implementation. The collections of information related to the 2016 
Mortgage Servicing Final Rule have been reviewed and approved by OMB 
previously in accordance with the PRA and assigned OMB Control Numbers 
3170-0016 (Regulation X) and 3170-0015 (Regulation Z). Under the PRA, 
the Bureau may not conduct or sponsor and, notwithstanding any other 
provision of law, a person is not required to respond to an information 
collection unless the information collection displays a valid control 
number assigned by OMB.
---------------------------------------------------------------------------

    \17\ 44 U.S.C. 3501 et seq.
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    The Bureau has determined that the interim final rule will provide 
firms with additional flexibility and clarity with respect to what must 
be disclosed under the 2016 Mortgage Servicing Final Rule; therefore, 
it will have only minimal impact on the industry-wide aggregate PRA 
burden relative to the baseline. The Bureau welcomes comments on this 
determination or any other aspects of this interim final rule for 
purposes of the PRA. Comments should be submitted to the Bureau as 
instructed in the ADDRESSES part of this document and to the attention 
of the Paperwork Reduction Act Officer. All comments will become a 
matter of public record.

List of Subjects in 12 CFR Part 1024

    Condominiums, Consumer protection, Housing, Insurance, Mortgages, 
Mortgagees, Mortgage servicing, Reporting and recordkeeping 
requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the Consumer Financial 
Protection Bureau amends 12 CFR part 1024 as follows:

PART 1024--REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X)

0
1. The authority citation for part 1024 continues to read as follows:

    Authority: 12 U.S.C. 2603-2605, 2607, 2609, 2617, 5512, 5532, 
5581.

Subpart C--Mortgage Servicing

0
2. Amend Sec.  1024.39 by revising paragraph (d)(3)(iii) to read as 
follows:


Sec.  1024.39  Early intervention requirements for certain borrowers.

* * * * *
    (d) * * *
    (3) * * *
    (iii) A servicer is prohibited from providing the written notice 
more than once during any 180-day period. If a borrower is 45 days or 
more delinquent at the end of any 180-day period after the servicer has 
provided the written notice, a servicer must provide the written notice 
again no later than 190 days after the provision of the prior written 
notice. If a borrower is less than 45 days delinquent at the end of any 
180-day period after the servicer has provided the written notice, a 
servicer

[[Page 47958]]

must provide the written notice again no later than 45 days after the 
payment due date for which the borrower remains delinquent or 190 days 
after the provision of the prior written notice, whichever is later.

    Dated: October 2, 2017.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2017-21912 Filed 10-13-17; 8:45 am]
BILLING CODE 4810-AM-P

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