1. Loss mitigation:
Regulation X sets forth requirements for soliciting, completing, and evaluating loss mitigation applications. As part of these requirements, servicers must notify borrowers in writing within five days after receiving a loss mitigation application acknowledging that it received the application, and stating whether it is complete or incomplete. If the application is incomplete, the servicer must list in its notice the additional documents and information the borrower must submit to complete the application, often called “acknowledgement notices.”
Examiners found that at least one servicer sent borrowers loss mitigation acknowledgment notices requesting documents, sometimes dozens in number, inapplicable to their circumstances and which it did not need to evaluate the borrower for loss mitigation
2. Foreclosure Process
In reviewing the loss mitigation and foreclosure process, examiners also found certain unfair and deceptive practices. At least one servicer sent notices of intent to foreclose to borrowers already approved for a trial modification and before the trial modification’s first payment was due without verifying whether borrowers had a pending loss mitigation plan before sending its notice.
CFPB examiners found at least one servicer sent notices warning borrowers who were current on their loans that foreclosure would be imminent.
3. Regulation Z disclosures
Regulation Z requires servicers to send periodic statements each billing cycle that display clearly and conspicuously in writing, content that includes the account’s transaction history encompassing any activity that causes a credit or debit to the amount currently due
4. Homeowners Protection Act
The Homeowners Protection Act requires automatic termination of borrower-paid private mortgage insurance (PMI) when the mortgage balance is first scheduled to reach 78% of the original value of the property securing the loan, if the borrower is current on the termination date, or, if the borrower is not current, on the first day of the first month beginning after the date that the mortgagor becomes current. For fixed rate mortgages, the timing is based on the initial amortization schedule for the mortgage.
Check the report for the full list of violations.