The CFPB's Final Collections Rule: Mortgage Servicing Provisions And Impacts

Published date23 November 2020
Subject MatterFinance and Banking, Debt Capital Markets, Charges, Mortgages, Indemnities, Financial Services
Law FirmBallard Spahr LLP
AuthorMr Reid F. Herlihy

The CFPB's debt collection final rule will significantly impact the operations of mortgage servicers. Not surprisingly, the CFPB declined to generally exempt mortgage servicers from the definition of a 'debt collector' under the federal Fair Debt Collection Practices Act ('FDCPA'). Accordingly, there are a number of important provisions in the final rule that must be addressed by the mortgage servicing industry.

As we will discuss in our upcoming webinar, a number of the final rule's requirements also represent important developments for mortgage servicers. For example, the final rule includes call frequency limitations and limited content messages, restrictions on communications at an inconvenient time or place, and provisions regarding electronic communications, email and text messages, and credit reporting, all of which will impact the operations of mortgage servicers.

The final rule also includes certain provisions that specifically apply to mortgage servicers, which we detail below.

'Consumers' under Section 1006.6 include a confirmed successor in interest

Certain provisions of the proposed rule attempted to harmonize the FDCPA with certain of the CFPB's mortgage servicing rules and related guidance. This effort is reflected in the final rule.

The final rule defines a 'consumer,' for purposes of Section 1006.6 (the general collection communication section which is analogous to Section 805 of the FDCPA) to include a 'confirmed successor in interest' (CSII), as that term is defined under the CFPB's mortgage servicing rules (Regulation X, 12 CFR 1024.31, or Regulation Z, 12 CFR 1026.2(a)(27)(ii)). A CSII is therefore deemed a 'consumer' for purposes of opt-out notices for electronic communications and the restrictions on: (1) communications at unusual or inconvenient times or places; (2) communications with consumers represented by an attorney; (3) communications at a consumer's place of employment; (4) communications with a consumer after a refusal to pay or cease communication notice; and (5) communications with third parties, including the procedures for email and text communications.

Communications after a refusal to pay or cease...

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