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New Mortgage Servicing Rules Effective January 10, 2014

Here is a summary of the New Real Estate Settlement Act and Truth in Lending Act that take effect in 2014:

Consumers must be provided with a periodic statement showing information on the payment due and the application of past payments.

If a consumer is 45 days or more delinquent they are required to receive a notice stating the date they became delinquent, notification of risk and expenses, and account history for the previous six months, and the total payment to become current.

The initial interests rate adjustment notice must be provided to a consumer between 210 days and 240 days before the first payment is due, and ongoing interest rate adjustment notices must be provided to consumers between 60 and 120 days before the first payment of the new rate is due.

Periodic payments must be properly credited as of the day or receipt. If a payment is less than the amount due and may be placed in a suspense account, and when the amount in the suspense account is sufficient to cover a periodic payment it must be promptly credited to the consumer’s account.

A Mortgage Servicer must provide an accurate payoff balance to a consumer no later than seven business days after receipt of a written request.

A Mortgage Servicer must disclose on the consumers periodic statement the total amount of funds being held in a suspense account.

A Mortgage Servicer must send 2 notices before a consumer is charged for force placed insurance. The first notice must be sent at least 45 days before a consumer is charged for forced placed insurance.

If a consumer sends evidence of having insurance coverage in place; within 15 days the forced placed insurance must be canceled, refund to the consumer forced placed insurance premium charges and related fees for any period of overlapping coverage, and remove from the consumer’s account all forced placed insurance charges.

Insufficient escrow funds are NOT a reason to charge for forced placed insurance. Funds will have to be advanced through the escrow to renew an existing hazard insurance policy.

When a consumer sends a written request asking to resolve an error the Mortgage Servicer must acknowledge the request within five days, and within 30 to 45 days correct the air and provide the consumer written notification of the correction.

A Mortgage Servicer a not charge fees for responding to notices of errors or information requests, or require a payment as a condition for providing a response. A fee for a payoff statement is allowed because it is not an information request.

A transferor Mortgage Servicer must have policies and procedures in place to ensure the timely transfer of all information and documents relating to the transferred mortgage loans

A Mortgage Servicer must retain records with respect to a consumers mortgage loan account until one year after the date of discharge or transfer of the servicing.

A Mortgage Servicer must establish live contact with a consumer by the 36 day of their delinquency and promptly inform them of their loss mitigation options. In addition, the consumer must be provided with written information about any loss mitigation options by the 45th day of delinquency.

The Mortgage Servicer must provide the telephone number for the person assigned to the consumer in assisting with a loss mitigation option.

Mortgage Servicer must design policies and procedures to ensure that personnel are assigned to delinquent consumers by the 45th day of the delinquency; the ability for consumers to reach the assigned personnel by phone and that such personnel can respond to inquiries; and that assigned personnel can retrieve in a timely manner the complete record of the consumers payment history and all written information in connection with a loss mitigation application.

A Mortgage Servicer must evaluate loss mitigation applications within 30 days.

A transferee Mortgage Servicer must review a loss mitigation application submitted by consumer to the prior transferor Mortgage Servicer.

If a loss mitigation application is denied the consumer must be sent a notice stating the specific reasons for the decision, including the specific inputs used in a net present value calculation, and a notice that the consumer may appeal.

A consumer may appeal a decision regarding loss of modifications. The appeal must include an independent evaluation using different personnel.

The foreclosure process cannot commence until a consumer is more than 120 days delinquent.

If a consumer has submitted a loss mitigation application the foreclosure process cannot begin until the consumer receives a notice that they are not eligible, consumer has exhausted the appeal process, the consumer rejects all loss mitigation options, or the consumer fails to perform under a loss mitigation agreement.