Mortgage Servicing (Prompt Crediting & Payoff Statements)

Question 1

What is prompt crediting in mortgage servicing?

Answer 1

Crediting a payment on the day of receipt for closed-end loans on a principal dwelling.

Question 2

To whom does the prompt crediting rule apply?

Answer 2

Servicers handling closed-end loans on a principal dwelling.

Question 3

What is a periodic payment?

Answer 3

Payment covering principal, interest, and escrow for a billing cycle.

Question 4

What is a partial payment in mortgage servicing?

Answer 4

Payment insufficient to cover principal, interest, and escrow for a billing cycle.

Question 5

What is a non-conforming payment?

Answer 5

Payment that doesn’t meet lender’s pre-set written requirements.

Question 6

What are some examples of non-conforming payment requirements?

Answer 6

Account number, cutoff hour, mail checks only, USD currency, specific address.

Question 7

What must be done with a partial payment if not immediately credited?

Answer 7

It can be held in a suspense or unapplied funds account.

Question 8

What must be disclosed if holding funds in a suspense or unapplied funds account?

Answer 8

The total amount of funds held must be disclosed in periodic statements.

Question 9

What is a payoff statement?

Answer 9

Statement of loan payoff amount, usually provided within seven business days.

Question 10

Who must provide a payoff statement?

Answer 10

Creditors, assignees, or servicers of open or closed-ended loans on dwellings.

Question 11

What exceptions exist to providing a payoff statement within seven days?

Answer 11

Loan in bankruptcy, foreclosure, or special cases like natural disasters.

Question 12

What payment methods cannot be exclusively required under EFT rules?

Answer 12

Preauthorized electronic funds transfers (EFT) cannot be sole required method.

Question 13

What is the purpose of suspense and unapplied funds accounts?

Answer 13

To hold payments temporarily before allocation to correct account.

Question 14

What happens if a non-conforming payment is accepted?

Answer 14

It may be credited up to five days after receipt.

Question 15

What must be done if a servicer accumulates enough funds in a suspense account to cover a periodic payment?

Answer 15

The funds must be credited as a periodic payment.

Question 16

What is the priority for handling non-conforming payments?

Answer 16

To reduce non-conforming payments by clearly communicating requirements.

Question 17

What are the acceptable ways to receive payments as per non-conforming payment rules?

Answer 17

Checks, money orders, and payments to specific addresses.

Question 18

When must a payoff statement be provided?

Answer 18

Within seven business days upon written request unless specific exceptions apply.

Question 19

What exceptions allow for delays in providing a payoff statement?

Answer 19

Bankruptcy, foreclosure, reverse mortgage, or natural disasters.

Question 20

How should a servicer handle a periodic payment upon receipt?

Answer 20

The payment should be credited on the day it is received.

Question 21

What is required if a servicer holds funds in an unapplied funds account?

Answer 21

The total held amount must be disclosed on periodic statements if applicable.