Mortgage Servicing (Prompt Crediting & Payoff Statements) Flashcards
What is prompt crediting in mortgage servicing?
Crediting a payment on the day of receipt for closed-end loans on a principal dwelling.
To whom does the prompt crediting rule apply?
Servicers handling closed-end loans on a principal dwelling.
What is a periodic payment?
Payment covering principal, interest, and escrow for a billing cycle.
What is a partial payment in mortgage servicing?
Payment insufficient to cover principal, interest, and escrow for a billing cycle.
What is a non-conforming payment?
Payment that doesn’t meet lender’s pre-set written requirements.
What are some examples of non-conforming payment requirements?
Account number, cutoff hour, mail checks only, USD currency, specific address.
What must be done with a partial payment if not immediately credited?
It can be held in a suspense or unapplied funds account.
What must be disclosed if holding funds in a suspense or unapplied funds account?
The total amount of funds held must be disclosed in periodic statements.
What is a payoff statement?
Statement of loan payoff amount, usually provided within seven business days.
Who must provide a payoff statement?
Creditors, assignees, or servicers of open or closed-ended loans on dwellings.
What exceptions exist to providing a payoff statement within seven days?
Loan in bankruptcy, foreclosure, or special cases like natural disasters.
What payment methods cannot be exclusively required under EFT rules?
Preauthorized electronic funds transfers (EFT) cannot be sole required method.
What is the purpose of suspense and unapplied funds accounts?
To hold payments temporarily before allocation to correct account.
What happens if a non-conforming payment is accepted?
It may be credited up to five days after receipt.
What must be done if a servicer accumulates enough funds in a suspense account to cover a periodic payment?
The funds must be credited as a periodic payment.
What is the priority for handling non-conforming payments?
To reduce non-conforming payments by clearly communicating requirements.
What are the acceptable ways to receive payments as per non-conforming payment rules?
Checks, money orders, and payments to specific addresses.
When must a payoff statement be provided?
Within seven business days upon written request unless specific exceptions apply.
What exceptions allow for delays in providing a payoff statement?
Bankruptcy, foreclosure, reverse mortgage, or natural disasters.
How should a servicer handle a periodic payment upon receipt?
The payment should be credited on the day it is received.
What is required if a servicer holds funds in an unapplied funds account?
The total held amount must be disclosed on periodic statements if applicable.
