What Is the "Successors in Interest Rule" for Servicing Companies?

The successors in interest rule establishes that servicing companies must treat a confirmed successor in interest as a borrower or consumer for the purpose of mortgage servicing. The term "successor in interest" refers to certain individuals who inherit or receive an ownership interest in a property from a borrower, usually a relative or upon the death of a joint tenant, when there is still an outstanding mortgage loan on the property. Usually, successors in interest will include individuals who acquire an interest in the property upon death of a borrower, in a divorce, or as a transfer from a parent to a child.

The CFPB has recently required servicing companies to treat the successor in interest as a borrower. As such, servicing companies should:

  • Promptly facilitate communication with any potential or confirmed successors in interest upon receiving notice of certain events, such as the death of the original borrower, the transfer of the property or the divorce of a borrower.

  • Inform the successor in interest about the necessary documents to confirm their interest in the property while also sending a written request for this information. This includes responding to requests from successors in interest or agents.

  • Assess, upon receipt of such documents, whether the potential successor in interest is qualified to be confirmed as a successor in interest.