REFORM AND CONSUMER LAWS IN THE NOTE BUSINESS: NNG Talks Steps Necessary to Comply with CFPB Amended Regulations.

        It is said and believed that rules are essential to keep organization and enhance clarity in communication throughout society. Some people need guidelines to better comprehend things or maybe simply for protection. Who helps with protection? For one, the CFPB, who was sought and established by the Congress to protect consumers by carrying out federal consumer financial laws, among other things.

        The Dodd-Frank Wall Street Reform and Consumer Protection Act passed in July of 2010 was reformed at the beginning of 2014. Although there are many new regulations dealing with mortgage loans, the ones that should be reviewed are Ability-to-Repay and Qualified Mortgage Standards and Mortgage Servicing Rules (RESPA). The CFPB’s amended regulation Z prohibits a creditor from making a higher priced mortgage loan without regard to the consumer’s ability to repay the loan. It is required by the Dodd-Frank Reform to: make reasonable/good determination of consumer’s financial ability to pay, establish certain protections from liability, and evidence of compliance with the rule of three years after a covered loan is “consummated”. Regarding mortgage loan servicing, CFPB’s Dodd-Frank Act addresses service’s obligations to correct errors by mortgage loan borrowers, provide information requested by borrowers, etc. In addition, this rule addresses obligations to establish policies and procedures, within reason, to reach certain “delineated objectives”. One must also provide information essential and relevant to mortgage loss mitigation. For further information on multiple CFPB regulations visit: www.consumerfinance.gov

        With that being said, how can you ensure you are in compliance? Well, it seems CFPB is more so focusing on the bigger players in the industry. As junior note buyers, our job is to be competent at what we do without coming off on the wrong foot with the CFPB. If buying non-performing loans and outsourcing the service work, one should make sure that they are using a servicer that is CFPB compliant, with policies and procedures in place to deal with loss mitigation requests from the borrower. For those who buy their own debt and do their own loss mitigation efforts one should: 1. Be responsive to the borrower in demand, 2. Evaluate those requests in a timely fashion, 3. Over-communicate, 4. Make sure every conversation with the borrower is noted in writing. Keep in mind if you are servicing your own loans, you need a servicing license. Last thing to remember is to make sure you have single point communication throughout the process that understands the borrower’s financial history as well as what they are looking for.

For more information, visit NNG at https://www.facebook.com/pages/National-Note-Group/529259247086369 or http://www.nationalnotegroup.com/.