What Are Coupon Books and When Can They Replace Periodic Statements?

A coupon book is a set of preprinted payment stubs (or a small book) with a page or stub for each billing cycle during a certain period. The idea behind coupon books is for borrowers to detach the page or stub and send it to the servicer, along with the payment, for each billing cycle.

Each page or stub must indicate the payment due date, the late payment fee and the amount due for each billing cycle. At the same time, the coupon book itself (but not necessarily each coupon) must contain information regarding the total outstanding principal balance, the interest rate, an explanation regarding prepayment penalties, and contact information through which borrowers can learn more about their loans.

Your servicer may choose to send you a coupon book instead of a periodic statement. In real terms, there is not much difference between one and the other. However, if your servicer decides to send you a coupon book, there are certain requirements to be fulfilled by the servicing company, which include:

• The coupon must include the information mentioned in the above paragraph.

• Servicers must make certain information available to the borrower upon request.

• Servicers must provide extra information to borrowers who are 45 days or more delinquent, such as the length of the delinquency, a notification of possible risks and expenses in case the delinquency is not solved, an account history, a notice showing any loss mitigation program the borrower has agreed to, and the total outstanding amount due.

• Your loan must have a fixed-rate.

Tellus TIP:

Servicers must send periodic statements to all borrowers who have ARMs, even if they decide to send them coupon books.