We’ve all been there with clients. A spouse or parent dies (or in bankruptcy) and those left behind run into brick walls (over and over again) trying to get any information or assistance at all out of bank servicers.
Well…effective April 19, 2018…all that changes….and banks and servicers are REQUIRED to extend all modification opportunities to heirs, spouses and debtors in bankruptcy under new RESPA and TILA servicing guidelines from the CFPB:
Two important sets of CFPB amendments to its RESPA and TILA mortgage servicing rules go into effect April 19, 2018. One set of amendments for the first time extends the broad array of mortgage servicing protections to successors in interest—such as homeowners who inherited a home after the borrower’s death or were awarded the marital home in a divorce. These homeowners now are entitled to protections relating to loan modifications, dispute rights, monthly statements, escrow accounts, servicing transfers, and other rights afforded by TILA and RESPA to home mortgage borrowers.
The other set of amendments is just as important, giving homeowners during and after bankruptcy the right to receive monthly mortgage statements. Without these statements, it has been difficult to determine if mortgage servicers were assessing improper fees or misapplying the homeowner’s mortgage payments, particularly during chapter 13 cases.
Protections are afforded a successor under RESPA and TILA once a servicer has confirmed the successor’s identity and ownership interest in the property. No other requirement should be imposed as a condition of “confirming” a successor in interest pursuant to the regulation. Once confirmed, the RESPA and TILA mortgage servicing rules apply even if the successor has not assumed personal liability for the mortgage loan under state law.