New measures finalized Thursday by the Consumer Financial Protection Bureau (CFPB) on foreclosures are concerning to CUNA due to potential increased regulatory burdens for credit unions. CUNA is currently analyzing the changes.
Early analysis shows that provisions concerning successors in interest, as well as bankruptcy periodic statements, will add to the regulatory burden already facing credit unions.
Successors in interest are defined as individuals who inherit or receive property when there is an outstanding mortgage loan on the property.
The final rule establishes a broad definition of successor in interest that generally includes persons who receive property:
CUNA met with the CFPB in March to discuss successors in interest, believing the rule will result in operational challenges for servicers, particularly with regard to accurately confirming the status of a successor in interest.
Another measure generally requires that mortgage servicers provide borrowers in bankruptcy periodic statements with specific information tailored for bankruptcy, as well as a modified written early intervention notice to let those borrowers know about loss mitigation options.
The rule maintains a small servicer exemption for many of the provisions of the rule that generally applies to servicer of 5,000 or fewer mortgage loans for all of which the servicer is the creditor or assignee. Most provisions will be effective within 12 months of publication of the rule in the Federal Register, while the bankruptcy statement provisions generally are effective 18 months of publication.