Regulation Room Commenters Made a Difference

Many times in explaining how it decided on the final rules, CFPB specifically mentioned Regulation Room commenters. Commenters didn’t always get the changes they wanted (remember that commenters sometimes disagreed about what would be best), but it’s clear that the discussion on Regulation Room had an impact on the final rule. (By clicking on the menu above, you can see more Final Rule Highlights, or look at the actual agency document for Rule # 1 and Rule #2).

Error Resolution

  • CFPB originally proposed to change the existing rule that borrowers must make claims of account errors in writing. It would have them consumers to make oral claims, and even would have let the servicer respond orally in some situations. CFPB noted that most consumer commenters on Regulation Room expressed doubts about whether borrowers would really benefit from this change. These commenters were concerned that not having something in writing might eventually hurt the borrower. – pg. 154
  • The final rule keeps the written notice of error requirement, although the definition of “error” is now broader (as many Regulation Room consumer commenters requested.) CFPB is now requiring that servicers must “maintain policies and procedures that are reasonably designed to ensure that the servicer can investigate, respond to, and, as appropriate, make corrections in response to complaints, whether written or oral, asserted by borrowers” – pg. 155
  • Additionally, CFPB adopted its proposal for a 30-day timeline for servicers to respond to error notices. CFPB cited to consumer commenters on Regulation Room who wanted a shorter timeframe, but it decided to stick with the original proposal. – pg. 188

Information Requests

  • Consumer commenters on Regulation Room similarly expressed concern that an oral process for making information requests would do borrowers more harm than good. Noting these concerns, CFPB decided to apply its new information request standards only to written requests. – pg. 211
  • Under the new rule, servicers must create policies and procedures “reasonably designed” to inform borrowers about the procedures for submitting written notices of error and written requests for information. -pg. 212

Loss Mitigation

  • Many consumer advocacy groups asked CFPB to require servicers to offer loan modification options to borrowers in trouble. In addition, CFPB cited to Regulation Room commenters who thought CFPB should require specific loan modification programs and services. -pg. 442
  • The final rule did not adopt these suggestions. However, CFPB emphasized that to maintain consumer access to credit, servicers must have procedures to evaluate borrowers for loss mitigation options. -pg. 443
  • CFPB’s proposal required servicers to give reasons for denying a requested loan modification. In making this part of the final rule, CFPB cited Regulation Room commenters’ concern that servicers might misrepresent that “investor requirements barred a loan modification” when this wasn’t accurate. -pg. 490-491
  • Several Regulation Room commenters were also concerned that servicers wrongfully denied borrowers’ “loss mitigation option” applications—either because the servicer claimed that it didn’t have the authority from the mortgage loan owner, or because it didn’t explain its net present value (NPV) calculations. In response, the final rule requires that denials based on NPV include specific details about how the servicer calculated NPV. It also requires that denials based on owner restrictions specifically identify the owner of the loan and the particular restriction.

Small Servicers

  • RegulationRoom commenters were divided about different requirements for small servicers. Consumer commenters were wary, although most of the trouble our commenters had seemed to be with large national mortgage companies. Commenters who worked for small, community banks or credit unions argued that their close relationships with borrowers (who also often had checking or savings accounts) avoided a lot of the problems with large servicers, and they worried that new regulations would increase costs for them and their customers.
  • Although CFPB didn’t specifically mention Regulation Room commenters, the final rule tries to balance these different concerns. CFPB keep the proposed small-servicer exemption to the new periodic statement requirements, and added an exemption to the new loss mitigation rules. It also added an exemption to new force-placed insurance requirements when the borrower has an insurance escrow account but only if the force-placed policy costs less than the homeowner’s original policy would have.