On June 27, 2017, the CFPB released two documents relating to the 2016 amendments to the 2013 mortgage rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z), collectively known as the 2016 Mortgage Servicing Final Rule.
The first document contained technical, non-substantive corrections to the 2016 Mortgage Servicing Final Rule. The Bureau addressed two typographical errors, the authority citation for Regulation Z, and several amendatory instructions relating to official commentary and certain periodic statement sample forms.
The second document addresses concerns raised by industry participants relating to the midweek implementation dates for the servicing rule that could create operational challenges for servicers. As it stands, certain provisions of the rule are set to take effect on Thursday, October 19, 2017. Additional changes will take effect on Thursday, April 19, 2018.
The Bureau states in the Policy Guidance that it “understands that, for many servicers, the Thursday effective dates could afford less than a full day—from the close of business overnight on each of the preceding Wednesdays—to update and test systems in order to be compliant with the 2016 amendments. If servicers do not have sufficient time to complete these tasks, their systems may be more likely to produce errors, which could expose servicers and consumers to risk.”
The CFPB acknowledges in its non-binding policy guidance that “servicers and consumers are likely to benefit if servicers have the weekend immediately before each of the effective dates to update and test their systems.”
In an effort to alleviate concerns that errors could expose servicers to regulatory risk, the Bureau announced that it does not intend to take supervisory or enforcement action for violations of existing Regulation X or Regulation Z resulting from a servicer’s compliance with the 2016 Mortgage Servicing Final Rule occurring up to three days before the applicable effective dates.
This means, in essence, that servicers can begin implementing the servicing rule a few days before the effective date without fear that the Bureau will launch supervisory or enforcement actions related to the new requirements.