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CFPB Issues a Final Rule Replacing the Single-Billing-Cycle Exemption With a Single-Statement Exemption Easing Timing Requirement for Servicers in Connection with Consumers’ Bankruptcy Cases

On March 8, 2018, the CFPB issued a final rule amending the provisions of Regulation Z mortgage servicing rules, issued August 4, 2016 (“2016 Servicing Rule”), by replacing the single-billing-cycle exemption in the 2016 Servicing Rule with a single-statement exemption that would apply regardless of when in the billing cycle a consumer bankruptcy event triggering modified or unmodified periodic statement has occurred. The final rule also provides amended and new staff commentary to clarify the operation of the final rule. This final rule will become effective on April 19, 2018, which is the same date as the portion of 2016 Servicing Rule it is amending is scheduled to become effective.

The final rule was adopted, without revisions, as the proposed rule issued on October 4, 2017. The final rule replaces the single-billing-cycle exemption with a single-statement exemption for the next periodic statement or coupon book that a servicer would otherwise have to provide under the 2016 Servicing Rule, regardless of when in the billing cycle the triggering event occurs.

Specifically, the amended section 1026.41(e)(5)(iv)(B) provides that, as of the date on which one of the following events listed in section 1026.41(e)(5)(iv)(A) occurs (namely: (1) a mortgage loan becomes subject to the requirement to provide a modified periodic statement, (2) a mortgage loan ceases to be subject to the requirement to provide a modified periodic statement, or (3) the servicer ceases to qualify for an exemption pursuant to 1026.41(e)(5)(i)), a servicer is exempt from the requirements of section 1026.41 (to provide periodic statement) with respect to the next periodic statement or coupon book that would otherwise be required. However, thereafter, the servicer must provide modified or unmodified periodic statements or coupon books that comply with the requirements of section 1026.41. The final rule also revises and adds new staff commentary to section 1026.41(e)(5)(iv)(B) (comments – 41(e)(5)(iv)(B)-1 through 3), to explain how the new timing requirement operates. This final rule also removes section 1026.41(e)(5)(iv)(C) and its related commentary, as they are no longer needed in light of the final rule amendment.

Suggested Action

Servicer should update their policies and procedures to reflect when the single-statement exemption applies and update their loan servicing system to account for the exemption triggering events.

If you have any question regarding this final rule, please reach out to our Contact Attorney.

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