Previously, Subsection (D) of Section 21 of Regulation X (12 CFR § 1024.21[d]) required a “Transfer of Servicing” notice to be provided to a borrower by a servicer no less than 15 days before the effective date of the transfer of the borrower’s loan to another servicer. A model form for this requirement was promulgated by CFPB in 12 CFR Pt. 1024, App. MS-2.
The amendments to the servicing rules under Regulation X made by the CFPB repealed Section 21 and substantively re-enacted the “Transfer of Servicing” notice requirements in new Section 33 (see 78 FR 10876 [2013]). Model Form MS-2 has been revised to be more streamlined than the previous version, because the CFPB wants “to significantly reduce the length of the require [sic] disclosure to borrowers in connection with mortgage servicing transfers” (Ibid. 10839 [2013]).
Due to this change, we will be providing new Cx17905, which will duplicate the newest version of Model Form MS-2. Cx21, which is our current Notice of Transfer document, will be retired as a generic document. Cx17905 will print under the following conditions:
1. “Closing On or After 01/10/2014” equals “Yes.”
2. “Document Package Type” equals “Closing.”
State-specific Versions
There are four states which require additional items of information to be disclosed on the Notice: Arkansas, Illinois, Minnesota, and Missouri. For these states, Cx17905 will continue to duplicate the Model Form MS-2, but will also contain the following additional items of information:
Arkansas:
Ark. Admin. Code 214.00.2-5010-1(c)(2) requires “the exact amount of the monthly payment including a breakdown of the principal and interest, any escrow amounts, if applicable, and an explanation of the method of the calculation that a reasonable person can understand.”
To fulfill this requirement, we will be including a table in the middle of the document which discloses each periodic payment, breaking them down into principal, interest, and escrow amounts. Preceding the table will be an explanation of how to calculate the periodic payments.
Following the table will be a clear and conspicuous notice concerning when the periodic payments are due, in order to fulfill the requirements of Ibid. 214.00.2-5010-1(c)(3), which require “a clear and conspicuous statement as to the monthly due date of each payment, regardless of the interval between the due date and assessment of any late payment penalty.”
Illinois:
205 Ill. Comp. Stat. 635/3-7 and Ill. Admin. Code tit. 38, § 1050.820 require several additions to the Notice, including the “total amount required of the mortgagor by the servicer for [the next 3 months’ payments]” (Supra) and “the name and address of the primary regulatory authority having jurisdiction over the residential lending activities of the entity to whom payments are to be sent.” (Ibid. § 1050.820[c][6])
The total estimated payments for the first three months after the transfer of servicing will be disclosed towards the middle of the document, except when it prints for HELOC transactions, in which case an explanation will be provided explaining to the borrower that the amount of payment for the next three months will be at least the “Minimum Payment Due,” as set forth in their HELOC agreement.
The name and address of the primary regulatory authority will print after the disclosure of the current and new servicers’ names and addresses in a new field. By default, this field will reference the Illinois Department of Financial and Professional Regulation. Clients who are transferring loans to servicers primarily regulated under a different agency should modify the field to include the name and address of such agency.
Minnesota:
Similar to Arkansas, Minn. Stat. Ann. § 47.205(2) – (1) requires the Notice to “include a detailed written financial breakdown, including but not limited to, interest rate, monthly payment amount, and current escrow balance.”
Since Minnesota’s and Arkansas’ requirements are essentially the same, we will be printing the same table and information from the Arkansas-version on the Minnesota-version, in the same area.
Missouri:
Similar to Illinois, Mo. Ann. Stat. § 443.861 requires a disclosure of the total amount of each of the next three months’ payments to be included in the Notice. We will, therefore, be printing the same three month information that we will be using in the Illinois-version in the Missouri-version (including the information concerning HELOCs).
Any custom print conditions or “Do Not Print” settings for clients on current Cx21 will be transferred over to new Cx17905.
Cx17905 will print if “Closing On or After 01/10/2014” equals “Yes.” and Cx21 will print if “Closing On or After 01/10/2014” equals “No.” Cx21 will eventually be retired as a generic document.
These changes will be available on January 8, 2014. If you have any questions or concerns about these change, or would like to request that this document print in your packages, please contact Client Support at 1.800.497.3584.
January 7, 2014
DR 140163 and DR 122162
Update:
Previously, this announcement mentioned that 12 CFR § 1024.21 had not been changed by the CFPB’s amendatory regulations. This was made in error and has been corrected.
January 30, 2014