For All Borrowers: Asking For, and Getting, InformationSkip to issue
§1. Making requests; getting answers
Now, if the borrower wants information about his/her account, the servicer doesn’t have to answer unless the request comes in writing, and in a particular form. But most borrowers try to get information over the phone. So, CFPB is proposing that servicers must respond to oral requests as well as written ones. And, it wants to shorten the response time. Servicers are very worried about the costs of this, so CFPB is also proposing some limits on information requests.
What this means for consumers. The servicer would have to treat oral and written requests for information the same way:
- Notify the borrower in writing within 5 business days that it got the request, unless it can provide the information within this time
- Respond within 10 business days (@ 2 calendar weeks) to requests for information about who currently owns the mortgage. This time period can’t be extended.
- Respond within 30 business days (@ 6 calendar weeks) to other kinds of requests. This can be extended to 45 business days (@ 9 calendar weeks) if, within the original 30 business days, the servicer tells the borrower it needs more time, and why.
The servicer couldn’t require the borrower to catch up on payments before responding. It couldn’t charge a fee for responding, except when the borrower requests a payoff amount (See Options for Avoiding Foreclosure § 3). Should CFPB allow servicers to charge for this? Are there other kinds of information requests that they should be able to charge for?
To help servicers control costs
- they could have a special phone number for requests and require borrowers to use only this number.
- they could ignore requests made by email or online unless they tell borrowers these methods may be used.
- they could provide the requested information orally (i.e., save the expense of a letter).
CFPB is not proposing to change the current rule that servicers don’t have to respond to information requests written on a payment coupon. Are these good compromises between making it easier for borrowers and not making it too expensive for servicers (who might pass along costs to consumers)?
Small servicers are especially concerned about the costs of keeping track of oral information requests. Should CFPB allow small servicers to respond only to written information requests?
What this means for servicers. Requests for information, whether oral or written, would have to be treated the same way as “qualified written requests.” Under the proposed new requirements for “reasonable information management policies and procedures,” servicers must be able to “provide borrowers with accurate and timely information and documents in response to borrower requests.” Servicers will want to look at CFPB’s commentary on which entities should be identified [RESPA 1024.36(a)(2)] if a borrower asks for information about the loan owner.
What new burdens will the proposals involve? CFPB thinks that allowing servicers to respond orally will limit new costs, for it’s been told that servicers who now respond to telephone requests usually can do so in the original phone call, or within an hour. Servicers who respond orally should make a note in the file, record the phone conversation, or in some other way document that they responded. (Written correspondence that includes the information requested would be adequate proof.)
The phone number designated for information requests must be the same as the number provided for error resolution (see the Getting Errors Fixed post), and must be “clearly and conspicuously” identified to borrowers. If the servicer provides different numbers for borrowers in different states, it must respond to a borrower’s request made at any of these numbers. An automated answering system can be used so long as the menu choices are clear and include talking to a real person. As with current rules, the servicer must respond to a request from someone purporting to be the borrower’s agent, although it can have “reasonable procedures” for verifying that the requestor is authorized to act for the borrower.
As part of a general expansion of the scope of Regulation X, the information request requirements would apply to subordinate lien (as well as primary) closed-end mortgages.
§2. What kinds of information?
CFPB is aware that it’s often trial lawyers, rather than ordinary consumers, who have submitted “qualified written requests” for information in the past. It doesn’t want to encourage this, because its main concern is that consumers can get information they need about their mortgage accounts. So, it proposes to define types of requests the servicer doesn’t have to respond to.
What this means for consumers. The servicer would not have to respond to requests:
- that the servicer has already answered once (unless the information changes over time);
- for confidential or “general corporate” information;
- for information not “directly related” to the borrower’s account;
- that come more than 1 year after the loan was transferred to another servicer (see the Who is Servicing Your Loan? post) or paid off.
- for information it doesn’t have;
- for information it can’t get from its records in the “ordinary course of business” with “reasonable efforts” (Another part of CFPB’s proposal – that servicers have “reasonable information management policies and procedures” for keeping loan records – would ensure that information about mortgage accounts is reasonably available to give borrowers);
- for an “unreasonable volume of documents or information”
- that are “overbroad,” meaning that the servicer can’t tell what specific information the borrower wants (is this a good definition of “overbroad”?)
- that are “unduly burdensome,” meaning that a diligent servicer would need more than 45 business days to respond, that “unreasonable” costs or effort would be involved, or that the request is the kind usually made during a law suit (is this a good definition? are there other or better criteria for knowing when a request is unduly burdensome?)
The servicer must tell the borrower within 5 business days if it thinks one of these reasons applies (and which one). Also, if the servicer can identify a proper information request in what is otherwise an overbroad or unduly burdensome request, it must respond to the valid request. Would ordinary borrowers be hurt by any of these restrictions?
What this means for servicers. CFPB is trying to increase ordinary consumers’ access to their own mortgage information while protecting servicers from requests that are more appropriately handled through discovery processes in litigation. Has it properly identified problematic information requests? In answering this, servicers will want to look at: examples of when information is and isn’t “reasonably available in the ordinary course of business”(§1024.36(d)(1)); what information can be withheld as “confidential, proprietary, or general corporate information” (§1024.36(f)(1)(ii)); and what kinds of requests are “overbroad or unduly burdensome” (§1024.36(f)(1)(iv)).
Read what CFPB says in the NPRM about information that need not be provided.
See the text of the proposed rule and CFPB commentary: §1024.36(f)