In response to feedback from credit unions, including the trades, the Consumer Financial Protection Bureau increased its mortgage servicing exemption from 1,000 loans to 5,000 loans.
However, because the CFPB has not yet released the actual rules, it is unclear how broad the exemption will be for small servicers. Those rules are expected to be released later Thursday.
The CFPB did provide a sneak-peak of its new final mortgage servicing regulations, saying in a release it will mandate new restrictions for servicers when dealing with struggling borrowers that include a ban on initiating foreclosure proceedings after the borrower has submitted a modification application.
Servicers must also meet new statement standards, provide a disclosure before adjusting interest rates, and provide more transparency when purchasing forced-placed property insurance. The new rules additionally mandate certain service standards like promptly crediting payments and correcting errors.
“Our priority has been to ensure that as few credit unions as possible would be subject to these requirements and the 5,000-loan threshold is a marked improvement over the proposal,” said CUNA President/CEO Bill Cheney in a release.
“While the devil is in the details, it appears small servicers such as credit unions will also be exempt from the loss mitigation application handling procedures, which is also a significant development for credit unions,” Cheney said.