The CFPB issued updates to its examination procedures for the Real Estate Settlement Procedures Act and the Truth in Lending Act to reflect recent amendments to Regulation X and Z, the implementing regulations. For example, the “Timely Payments” section of the examination procedures has been amended to reflect the requirement that a servicer may not purchase force-placed insurance unless it is unable to disburse funds from the borrower’s escrow account to maintain the borrower’s hazard insurance and to reflect a limited exemption from the restriction on force-placed insurance purchases for small servicers. The examination procedures were also amended to reference new definitions applicable to the mortgage servicing rules under RESPA and Regulation X including the definition of “mortgage loan.” In particular, the examination procedures clarify that the definition of “mortgage loan” includes, but is not limited to, refinancing transactions, whether secured by a senior or subordinate lien. Finally, the examination procedures note that the CFPB’s recent amendments to the mortgage rules modified the disclosure in Appendix MS-2 to Regulation X that servicers may use to comply with the mortgage servicing transfer disclosure.
Alert December 10, 2013