Alert December 10, 2013

CFPB Amends Examination Procedures to Incorporate Amendments to Mortgage Rules

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.