The Consumer Financial Protection Bureau’s (CFPB) new mortgage servicing rule contains information on a partial exemption from early intervention requirements for borrowers in bankruptcy.
While any borrower on a mortgage loan is a debtor in bankruptcy, mortgage servicers are exempt from the live contact requirements.
They are also exempt from the written notice requirements if:
If there is an available loss mitigation option and/or no borrower on the mortgage loan has provided a FDCPA notice, the servicer must comply with the written notice requirements as follows:
A servicer must comply with these timing requirements regardless of whether the servicer provided the written notice in the preceding 180-day period. The written notice may not contain a request for payment.
In addition, a servicer is not required to provide the written notice more than once during a single bankruptcy case. If any of the borrowers is a debtor in bankruptcy, a servicer may provide the written notice to any borrower.
A servicer must resume compliance with the live contact and written notice requirements after the next payment due date that follows the earliest of the following events:
If the borrower’s bankruptcy case is revived, the partial exemption requirements once again apply.