The Consumer Financial Protection Bureau (CFPB) on Thursday issued a final rule to simplify statement requirements for mortgage servicers working with borrowers in bankruptcy. The revisions, which change provisions in the bureau’s 2016 rule for mortgage servicers, is scheduled for publication in the Federal Register March 12 and will take effect April 19.
That’s the same effective date as applies to the other sections of the 2016 rule relating to bankruptcy-specific periodic statements and coupon books.
The rule provisions addressing borrowers in bankruptcy tell servicers when they should begin and cease sending modified periodic statements or coupon books to consumers who are entering or exiting bankruptcy. The previous rule provided a single-billing-cycle exemption, which apparently has turned out to be too technical and confusing and has been interpreted in several different ways. The revision instead provides a single-statement exemption.
As finalized in 2016, the rule generally provided for transitioning to periodic statements or coupon books with bankruptcy-specific modifications when a borrower entered into bankruptcy (unless they were otherwise exempt) and transitioning away from them when the consumer is exiting bankruptcy. To give servicers time to make transition, an exemption for one billing cycle was provided depending on certain triggering events, such as when statements are sent and when payment is due. This is revised to a single-statement exemption.