Regulatory Compliance Outline for Banks in Transition from Small Servicer Exempt to Non-Exempt (Transition Banks)

Definition of Exempt Small Servicer

  • Banks with under 5,000 Closed-End First and Second Trust Mortgages
  • Definition is in Regulations and 2013 RESPA (Reg X) and TILA (Reg Z) Mortgage Servicing Final Rules – Small Entity Compliance Guide by CFPB dated January 8, 2014 (Mortgage Servicing Regulations)

When must Transition Bank comply with Non-Exempt

  • Organic growth, 6 Months after crossing 5,000 threshold or January 1st of following year whichever is later
  • Growth via M&A, specifics of transaction must be considered
  • Data integrity is critical for proper loan counting

New Mortgage Servicing Regulations for Transition Banks

  • Servicing Policies and Procedures (Reg. X – § 1024.38)
  • Early Intervention with Delinquent Borrowers (Reg. X – § 1024.39)
  • Continuity of Contact with Delinquent Borrowers (Reg. X – § 1024.40)
  • Loss Mitigation Procedures (Reg. X – § 1024.41) *Not 100% percent, limited non-exemption*
  • Periodic Statements (Reg. Z – § 1026.41)

Mortgage Servicing Regulations that Transition Banks should already be complying with, i.e. all Banks must comply with these sections of Mortgage Servicing Regulations

  • Force-Placed Insurance (Reg. X – § 1024.37) *Not 100% percent, limited exemption*
  • Interest Rate Adjustment Notices (Reg. Z – § 1026.20(c) and (d)
  • Payment Crediting and Payoff Statements (Reg. Z – § 1026.36)
  • Error Resolution and Information Requests (Reg. X – § 1024.35 and .36)