CUNA joined with other financial trade organizations Wednesday to outline significant unaddressed issues in the Consumer Financial Protection Bureau’s (CFPB) amendments to its Real Estate Settlement Procedures Act (RESPA) rule, scheduled to take effect in April. The rule requires mortgage servicers to send monthly billing statements to consumers in active bankruptcy cases and certain other bankruptcy cases.
“The CFPB's final rule is contrary to this strong public policy of protecting bankruptcy debtors, will cause conflict within the administration of the bankruptcy case, and will unnecessarily subject mortgage servicers to serious liability under the Bankruptcy Code,” the letter reads, adding that the final rule “attempts to address a mistakenly perceived issue.”
The organizations go on to note that the issue was comprehensively addressed by the Federal Bankruptcy Rules Committee in December 2011. These rules remain in effect.
The federal rules require mortgage servicers to notify Chapter 13 debtors, the debtor’s attorney and the trustee of any change in the consumer’s monthly payment and any fee posted to the consumer’s account. These notices have specific requirements and are sent using a process governed by the rules.
“The CFPB’s rule, in its current form, presents significant risk of diluting the Judiciary's efforts in effectively administering its bankruptcy cases and usurps the Judiciary’s rule-making power in deciding what information should and should not be provided to a debtor during a bankruptcy proceeding. Our concerns focus on a series of forced communications and potential violations of the Bankruptcy Code that will lead to significant consumer confusion.
Should the CFPB not repeal its proposed rules, the organizations asked the bureau address several concerns, including: