Are There Any Special Rules for Servicers When Dealing with Delinquent Borrowers?
Yes, there are certain limitations and obligations for servicing companies as they deal with delinquent borrowers. Note that a borrower is delinquent whenever that borrower fails to pay a required mortgage payment on time. Considering that the incentive for servicing companies is to service borrowers with low credit ratings and high default chances, an unregulated servicing market would lead to recurring cases of predatory servicing. In response to this conflict of interests, certain regulations have been put in place to help borrowers who find themselves in a situation of delinquency.
If you are delinquent on your mortgage loan, servicers must make good faith efforts to establish contact with you by the 36th day of your delinquency, and to promptly inform you that loss mitigation options may be available in certain cases. Moreover, servicers must send you a written notice informing you about these loss mitigation options by the 45th day of your delinquency.
Current regulations not only require servicers to establish contact with you in the event of delinquency, but these regulations also force servicers to guide you and to maintain contact with you through this process. Servicers are required to maintain reasonable policies and procedures with respect to providing you with access to assistance personnel in case loss mitigation options are applicable. In practice, this translates to an obligation on service providers to ensure that you will be assigned personnel by either your receipt of written information or the 45th day of your delinquency, whichever is earlier. These personnel should be available to assist you by phone and will give advice on the status of any loss mitigation application and its estimated timeline. Furthermore, they should forward your information to the servicers responsible for evaluating your loss mitigation options, if applicable.
- What Is Predatory Mortgage Servicing?
- What Are the Specific Formal Requirements for Periodic Statements?
- What Are Coupon Books and When Can They Replace Periodic Statements?
- When Are Servicers Allowed to Stop Providing Periodic Statements or Coupon Books?
- How Are Periodic Statements Delivered?
- What Is the Rule on Interest Rate Adjustment Notices?
- When Should I Receive an Interest Rate Adjustment Notice?
- What Information Must Be Included in the Initial and Ongoing Interest Rate Adjustment Notices?
- What Is the Prompt Payment Crediting Rule for Servicing Companies?
- What Are the Prompt Payment Crediting and Payoff Statement Rules for Servicers?
- Can the Loan Servicer Refuse to Provide You with a Payoff Balance Statement within 7 Days?
- Can I Choose My Mortgage Servicing Company?
- Are There Any Rules Regarding Written Communication with Servicing Companies?
- Are Servicers Allowed to Charge a Borrower for Force-Placed Insurance Coverage?
- What Are the General Rules Regarding Servicing Policies, Procedures, and Requirements?
- What Is the "Successors in Interest Rule" for Servicing Companies?
- How Should I Inform Servicers When I Become a Successor in Interest?
- Am I Liable for the Loan Once Confirmed as a Successor in Interest?
- Can I Change My Mortgage Servicing Company?
- Can I Turn to a Government Agency to Complain Against a Mortgage Servicing Company?
- Are There Any Federal Laws Protecting Me from Mortgage Servicers?
- What Are the Mortgage Servicing Rules Issued by the Consumer Financial Protection Bureau?
- What Is the Periodic Statement Rule for Mortgage Servicers?
- Are There Any Exceptions to the Periodic Statement Rule?
- How Many Periodic Statements Am I Entitled to Receive?