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Compliance Update - April 2017
The CFPB recently issued a reverse mortgage-specific examination guide for servicers, and as your servicing partner, we have been carefully reviewing the examination guide to ensure that all of Celink’s policies and procedures are in compliance.
You will be pleased to know that after a careful review, Celink is in compliance with a majority of the functions that the CFPB indicates they would focus on in the event of an examination. We identified a few minor gaps in our documented procedures that we are working to address and resolve very quickly. If you have questions about Celink’s review of this document, please don’t hesitate to let us know. We are happy to assist you in any way to ensure full understanding and compliance.
There are a few areas that still need to be clarified by the CFPB. The servicing community, through NRMLA, submitted some these questions and requests for clarification to the CFPB while at the annual conference in Chicago last year.
Those open questions include:
Module 6, Question 10 (d)
Celink currently has staff available to handle calls from Spanish-speaking borrowers and we utilize a translation service for those borrowers who want to speak with us in a language other than English and Spanish. In addition, Celink is required by law in Puerto Rico to provide all written correspondence to borrowers in both Spanish and English. However, the CFPB appears to be potentially requiring servicers to provide written correspondence to borrowers in other areas of the country in alternate languages. Celink is working with outside compliance counsel to determine how the CFPB is expecting servicers to comply and which languages would need to be considered and accommodated.
Module 6, Question 25
The way that this item is written it appears to reference that a bankruptcy filing would cause a due and payable event – which is not a maturity trigger event with a HECM. We believe that the CFPB incorrectly drafted this item, but are working to get clarification from the CFPB on what requirements they are expecting in the event of a borrower (or heir) filing for bankruptcy protection.
Module 6, Question 29
The CFPB is indicating that they intend to test whether the servicer has provided copies of appraisals to the borrower’s successor. NRMLA has raised the point that it is standard industry practice that servicers would always provide a copy of the appraisal to the borrower (or their heirs) upon request, but copies are not sent proactively. The initial indication from the CFPB is that they agreed with NRMLA’s input and that they would review this feedback and provide an update. An update has not yet been received by NRMLA.
Module 6, Question 30
The wording of this item indicates that the servicer could not initiate foreclosure until after six months from the death of the last surviving borrower. NRMLA raised the point that servicers do obtain time extensions from HUD in those instances where the borrower (or their heirs) are actively trying to satisfy the loan. However, due to HECM servicing requirements and the related penalties associated with debenture interest curtailments for missing key deadlines – such as the first legal deadline – servicers may have to refer the loan to an attorney to start the foreclosure process before that six month anniversary. The initial indication from the CFPB is that they agreed with NRMLA’s input and that they would review this feedback and provide an update. An update has not yet been received by NRMLA.