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CUNA and NAFCU each submitted comment letters to the Consumer Financial Protection Bureau regarding 2013 Regulation X (RESPA) and Regulation Z (TILA) mortgage servicing rules, urging the CFPB to adopt several changes and clarifications.

The bureau is proposing several changes to its rule on successors in interest — people who inherit or receive property when there still is an outstanding mortgage loan on the property.

CUNA asserted expanding the scope of this rule will likely cause operational challenges for servicers, particularly with regard to accurately confirming the status of a successor in interest.

"We ask the CFPB to help mitigate the impact of these changes by laying out a process under which servicers can and should identify and communicate with successors in interest," CUNA wrote in its letter. "Compliance with such a process as articulated by the Bureau should then afford servicers a form of ‘safe harbor' under the rule."

Redefining Delinquency

The CFPB is proposing to add a general definition of "delinquency" that would apply to all of the servicing provisions of Regulation X, which NAFCU Director of Regulatory Affairs Alicia Nealon said the trade association supports.

Regarding the bureau's attempts to clarify foreclosure notice issues, Nealon said NAFCU thinks this proposal falls short and "recommends that the Bureau adopt a provision that will allow credit unions to defer to state law when it requires longer notice periods prior to foreclosure."

CUNA said the CFPB should permit additional exceptions to the 120-day rule. Borrowers who violate a "Preservation, Maintenance & Protection of Property" covenant in a security instrument could remain current on their mortgage (or less than 120 days delinquent) while the property continues to deteriorate.

Regulation X requires that servicers, at a minimum, establish or make good-faith efforts to establish live contact with consumers by the 36th day of their delinquency and, if appropriate to their situation, promptly inform them of loss mitigation options that may be available. Reg X, however, provides an exemption from these requirements when a borrower is in bankruptcy.

NAFCU wrote that it "strongly opposes" requiring servicers to provide a written early intervention notice to a borrower in bankruptcy. "We believe it is inappropriate to require services to provide a written early intervention notice to a borrower who is jointly liable on mortgage loan with someone who is a debtor in a Chapter 12 or Chapter 13 bankruptcy."

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