Servicing Flashcards
Define: Mortgage servicers
Mortgage servicers
* Collect homeowners’ mortgage payments and pass on those payments to investors, tax authorities, and insurers, often through escrow accounts
* Work to protect investors’ interests in mortgaged properties, for example, by ensuring homeowners maintain proper insurance coverage
Where are servicing requirements found?
- Regulation Z (RESPA)
- Regulation X (TILA)
Define: Small servicer
- Services, along with any affiliates, 5,000 or fewer mortgage loans of which the servicer is the creditor or assignee
- Is a housing finance agency, or
- Is a nonprofit entity that services 5,000 or fewer mortgage loans for which the servicer (i.e., the nonprofit) is the creditor
Servicing error resolution
The following timelines apply to servicers who receive written complaints asserting errors:
- Acknowledge receipt within five days
- Correct the error and provide notification of its correction or
- Conduct an investigation and provide notification within 30 days that no error has occurred and the reasons for that determination
- This 30-day timeframe may be extended by an additional 15 days with notice to the borrower
Servicing information requests
The following timelines apply to servicers who receive written requests for information:
- Acknowledge receipt within five days
- Provide the information or
- If after a reasonable search is conducted the information is not available, inform the consumer within 30 days
- This 30-day timeframe may be extended by an additional 15 days with notice to the borrower
Note: If the information sought by a consumer concerns the identity of or contact information for the owner or assignee of the consumer’s mortgage loan, the servicer’s response must occur no later than ten business days after receipt of the request
Define: Force-placed insurance
Hazard insurance coverage purchased by the servicer when a borrower fails to maintain the proper coverage
Force-placed insurance placement
Prior to making such a placement, a servicer must have a reasonable basis upon which to believe the consumer’s insurance has lapsed.
Prior to charging a borrower a premium for a force-placed policy, a servicer must
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At least 45 days prior to making such a charge, send notice to the consumer regarding the issue indicating that
- The borrower’s hazard insurance has expired
- Maintenance of hazard insurance is a requirement of the loan, and
- Any insurance placed by the servicer may be more costly than insurance which could be obtained by the borrower
- At least 15 days prior to making such a charge, send a reminder that an assessment for hazard insurance will be made unless the consumer provides proof of insurance
A servicer must cancel any force-placed insurance within 15 days of receiving evidence of insurance from the borrower and refund any premiums charged for overlapping insurance
Closing disclosure servicing information
Creditor must disclose its partial payment policy. The disclosure must indicate
* Whether the creditor accepts partial payments
* If the creditor accepts partial payments, that the creditor may hold those partial payments in a suspense account until the full periodic payment is received
* If the creditor does not accept partial payments, that fact
* The fact that if the loan is sold, the new creditor may have a different policy
Servicing statements / coupon book
Servicers
- Must provide a statement during each billing cycle, or
- If servicing a fixed-rate mortgage may, under certain conditions, provide a coupon book to a borrower for his use in making payments.
- Small servicers are exempt from this requirement.
The statements must generally be mailed
* within a reasonably prompt time after the payment due date, or
* at the end of any courtesy period provided for the previous billing cycle.
A billing statement must contain, among other items:
- The amount due
- The payment due date
- The amount of any late fee and the date on which it will be imposed
- The monthly payment and a breakdown of the amount of the payment goings towards principal, interest, and any escrow-required payments
- The amount of any payment past due
- An itemization of transaction activities over the past payment period
- Account information (i.e., outstanding principal, interest rate)
- Partial payment information
Servicing delinquent borrowers
Must make good faith efforts to establish live contact with a delinquent borrower by the 36th day of his delinquency and advise him of his loss mitigation options, if appropriate.
If the delinquency continues, the servicer must provide written notification to the delinquent borrower by the 45th day of delinquency.
The written notice must include
- A statement encouraging the borrower to contact the servicer
- Contact information for servicer personnel to contact with regards to the delinquency
- A brief description of loss mitigation options that might be available
- A statement with instructions on how to obtain more information about loss mitigation options
- The web address for the CFPB or HUD where the borrower might find a list of homeownership counselors
ARM adjustment notice
- First adjustment, a written notice must be provided between 210 and 240 days prior to the adjustment
- Ongoing adjustments, the notice must be given between 60 and 120 days prior to the first payment at the new rate.
Crediting of Mortgage Payments and Payoff Requests
Periodic payments must be credited as of the day of receipt
Payoff statements must be provided within seven business days after receipt of a written request from the borrower
Define: Periodic payment
An amount sufficient to cover
* principal
* interest
* escrow (if applicable)
for any given billing cycle
