CFPB Issues New Rule for Mortgage Servicers and Borrowers in Bankruptcy

What steps are mortgage servicers required to take when they learn that a borrower has filed for Chapter 7 bankruptcy or Chapter 13 bankruptcy? According to a recent article in HousingWire, the Consumer Financial Protection Bureau (CFPB) has plans to finalize a rule concerning mortgage servicers and borrowers in bankruptcy, which is previously issued in October 2017. What do you need to know about the new rule, and how it might it affect consumers who have filed for bankruptcy and trying to keep their homes?

How the New Rule Changes the 2016 CFPB Rule

Up until now, mortgage servicers have been held to a previous rule concerning borrowers in bankruptcy issued by the CFPB in 2016. Those rules require servicers to submit statements to specific consumers in bankruptcy, starting on April 19, 2018, as well as issuing guidance for the timetable for mortgage servicers in providing these periodic statements to consumers in bankruptcy.

However, the CFPB is issuing a new rule. Why is there a need for changes? According to the CFPB, there are a number of technical aspects of the rule from 2016 that relate to the timeline for servicers to transition to offering periodic statements in connection with a consumer’s bankruptcy case, which could lead to unintended difficulties with implementation. Most significantly, there is a confusing single-billing-cycle exemption. The new rule addresses that problem.

New Rules and the Single-Statement Exemption

Under the new rule, which will be finalized soon, there is a single-statement exemption for the upcoming statement that a servicer would otherwise be required to offer, no matter when the triggering event happens. In other words, under the new rule, no matter when the bankruptcy filing or discharge occurs, there is only a single-statement exemption.

In general, it gives servicers more time to provide required documents to borrowers in bankruptcy, and it goes into effect on April 19, 2018.

Contact an Oklahoma Bankruptcy Attorney

When you are thinking about filing for bankruptcy and you currently have a home mortgage, it can be difficult to understand your options. Mortgage servicers must provide certain information to borrowers, but the types of documents and the timing of them can be extremely complicated. An experienced Oklahoma bankruptcy attorney can assist with your case. Contact Deborah Brooks & Associates, P.C. for more information about the services we provide to clients throughout Oklahoma.