CFPB Issues FAQs on Bankruptcy Issues Under the 2016 Mortgage Servicing Final Rule

The CFPB has issued Frequently Asked Questions (FAQs) concerning certain provisions of its 2016 Mortgage Servicing Final Rules that become effective on April 19, 2018.  The FAQs pertain to certain issues regarding borrowers in bankruptcy, including successors in interest who filed for bankruptcy.

In particular, the FAQs fall into five categories relating to bankruptcy, including bankruptcy periodic statements, bankruptcy coupon books, bankruptcy reaffirmation, bankruptcy successors in interest, and bankruptcy provisions effective dates.  The various categories include, but are not limited to, answers to the following questions:

• Are payments that came from a trustee included in the transaction activity on the modified periodic statement?
• If a borrower in bankruptcy is represented by counsel, to whom should the periodic statement be sent?
• Does a servicer have to send a new coupon book immediately upon learning that a borrower enters bankruptcy, or can a servicer continue to send coupon books on its normal schedule (e.g., annually)?
• Can a borrower’s reaffirmation of personal liability for the mortgage loan affect whether a servicer is exempt from the periodic statement requirements?
• Do the modification to the periodic statement required for borrowers in bankruptcy apply if the borrower is confirmed successor in interest in bankruptcy?
• How does a servicer comply with the new bankruptcy periodic statement rules under Regulation Z, § 1026.41(e)(5) and (f) if a borrower became a debtor in bankruptcy prior to April 19, 2018, and a statement is required starting on or after April 19, 2018?

Answers to these and the other FAQs can be found here.