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 communication request
As does the FDCPA statutory language, the final rule, in Section 1006.6(c)(1), includes certain exceptions from the general prohibition on communicating with a consumer after a refusal to pay or cease communication request. The Official Commentary to the final rule clarifies that, in accordance with a previous CFPB Interpretive Rule and Bulletin, a mortgage servicer does not violate the FDCPA, despite a cease communication request, by complying with the CFPB's mortgage servicing requirements for written early intervention notices (12 C.F.R. 1024.39(d)(3)), force-placed insurance notices (12 C.F.R. 1024.37), adjustable-rate loan initial adjustment notices (12 C.F.R. 1026.20(d)), and periodic statements (12 C.F.R. 1026.41).
Mortgage-specific content for debt validation notices–on hold
The proposed debt collection rule included optional, alternate content, to be used in a debt validation notice for loans subject to the mortgage periodic statement requirement in 12 C.F.R. 1026.41. However, the CFPB reserved addressing the debt validation notice provisions for a forthcoming rule to be released in December 2020.
Originally Published by Ballard Spahr, November 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
