The American Bankers Association last week provided feedback to the Consumer Financial Protection Bureau on proposed changes to the final servicing rules for servicers sending periodic statements to borrowers in bankruptcy. Under current regulations, servicers must immediately transition from sending standard statements to sending modified statements when consumers enter into bankruptcy. The proposal would replace the existing single-billing-cycle exemption with a single-statement exemption, providing servicers more leeway when making this transition.
While ABA acknowledged that the proposed single-statement exemption addresses many of the issues created by the final servicing rules, it noted that it remains impractical to determine in real time when a triggering event takes place. Servicers often need to conduct a manual review to determine that a triggering event for a statement transition has occurred, ABA said, urging the CFPB to add language to the final rule that could help insulate mortgage servicers who aren’t able to suppress a statement that is sent shortly after a triggering event.
In addition, the association requested that the CFPB grant an additional three month compliance extension to ensure that servicers are able to implement and test their compliance systems and train employees. If finalized, the amendments are scheduled to take effect April 19, 2018. For more information, contact ABA’s Rod Alba.