What Is the Successors in Interest Rule for Servicing Companies?

The successors in interest rule is a set of federal mortgage servicing protections, in effect since April 19, 2018, that require servicers to work with people who inherit or otherwise receive a home that still has a mortgage on it. Once the servicer confirms your identity and your ownership interest, it must treat you as a borrower under the servicing rules, so you get monthly statements, can dispute errors, and can apply for help to avoid foreclosure, even if you never sign or take over the loan. To start, send the servicer a written request that names the borrower you received the home from and identifies the loan; the servicer must then tell you in writing which documents it needs.

A servicer is the company that collects the payments and handles the account. What loan servicing is covers its full role.

Who counts as a successor in interest?

You are a successor in interest if a borrower's ownership interest in the home passed to you through one of five family or estate transfers that the Consumer Financial Protection Bureau (CFPB) lists in Regulation X and Regulation Z:

• Death of a co-owner. You owned the home with the borrower as joint tenants or tenants by the entirety (forms of co-ownership where the survivor automatically gets the property), and the borrower died.
• Death of a relative. You are a relative who received the home because the borrower died, by will or under state inheritance law.
• Transfer to a spouse or child. You are the borrower's spouse or child and became an owner, for example by a deed from a living parent.
• Divorce or separation. You are the borrower's spouse or former spouse and became an owner through a divorce decree, legal separation agreement, or related property settlement.
• Living trust. The borrower moved the home into a living trust, remains a beneficiary, and did not hand the right to live in the home to someone else; the trust's beneficiaries are the successors.

A buyer who is not the borrower's spouse or child generally does not qualify. A "potential" successor is someone who says they fit one of these categories. A "confirmed" successor is one whose identity and ownership interest the servicer has verified. The servicer cannot require you to take over the loan before it confirms you.

How do you get confirmed?

1. Tell the servicer. Call or write using the contact information on any statement or notice for the loan. You do not need to use the words "successor in interest." Telling the servicer about a death, divorce, or transfer is enough to trigger its duty to communicate with you. The servicer does not have to search for you if no one tells it.
2. Send a written request. Include your name and contact information, the borrower's name, the loan number or property address, and how you received the home. If the servicer has a designated address for information requests, send it there. An attorney, relative, or other agent can send it if the request includes your written authorization.
3. Watch the deadlines. The servicer must acknowledge your written request within 5 business days and send a written list of the documents it needs, plus a phone number for help, within 30 business days. It can take 15 more business days if it tells you in writing why before the 30 days run out. The CFPB has said larger servicers should often move faster; for a surviving spouse who owned the home as a tenant by the entirety, it expects a response well short of 30 days.
4. Send the documents. Send copies, keep the originals, and keep proof of when the servicer received them.
5. Get the decision. After it receives the documents, the servicer must promptly tell you that it has confirmed you, that it needs specific additional documents, or that you are not a successor in interest. The rules set no fixed number of days, but a decision is not prompt if the delay keeps you from applying for foreclosure help on time.

What documents can the servicer ask for?

The documents must be reasonable under your state's property law, your situation, and the records the servicer already has. The CFPB gives these examples:

The servicer may also ask for documents it reasonably needs to prevent fraud, such as when it has reason to think a document is forged. If title is being fought over in court, it can require the court's decision before confirming you.

What does the servicer owe you once you are confirmed?

A confirmed successor is treated as a borrower for the federal servicing rules. That means the servicer must:

• Send periodic statements, escrow statements, interest rate change notices for an adjustable-rate loan, and notices when the loan or its servicing is transferred.
• Respond to your written notices of error and requests for information within the same deadlines that apply to the original borrower.
• Give you a payoff statement and credit a full payment on the day it arrives.
• Follow the force-placed insurance rules before charging the account for insurance it buys.
• If the home is your principal residence, contact you about options when payments fall behind, evaluate a complete application for loss mitigation (options such as a loan modification or forbearance that help you avoid foreclosure) that arrives more than 37 days before a scheduled foreclosure sale, and wait until the loan is more than 120 days past due before starting foreclosure. Small servicers are exempt from most of these steps but must still observe the 120-day wait.

If you sent a loss mitigation application before you were confirmed, the servicer can either review it right away or hold it. If it holds the application, it must treat it as received on the date it confirms you, as long as the home is your principal residence.

Two limits apply. First, the servicer does not have to send you a notice it is already sending to another borrower on the same account, though you can request copies. Second, if you are not liable on the loan, the servicer may send you an optional notice with an acknowledgment form. Until you sign and return the form, it does not have to send you most notices, including statements and delinquency notices, or call you about missed payments, but you can still dispute errors, request information, and ask for a payoff statement. There is no deadline to return the form, and signing it does not make you liable for the debt. Whether you are liable for the loan once confirmed explains your options for keeping, taking over, or selling the home.

Which servicers must follow the rule, and what if yours does not?

Every servicer must answer a written request from a potential successor and treat confirmed successors as borrowers. Small servicers, those that service 5,000 or fewer loans and own or made all of them, are exempt from the duties to reach out to you and to decide promptly described in steps 1 and 5, though they must still meet the deadlines in step 3. They also keep the exemptions they have for other borrowers, such as not having to send monthly statements.

If the servicer will not talk to you, demands documents that do not exist under your state's law, or does not decide:

1. Put it in writing. Send a written request, or a notice of error once you are confirmed. The rules on written communication with servicers explain the format and deadlines.
2. File a CFPB complaint. Submit it online or call (855) 411-2372. The CFPB forwards it to the servicer, and most companies respond within 15 days.
3. Know your court options. The rules give a potential successor no right to sue over the confirmation decision itself. After confirmation, you have the same rights to sue for servicing violations as any other borrower.

If payments are already behind, ask about loss mitigation as soon as you are confirmed. The rules for servicers when borrowers are delinquent list the deadlines that protect you before a foreclosure sale.