CFPB Suggests That Servicers Do Have to Monitor Whether a Successor in Interest is in Bankruptcy
Mortgage Compliance Magazine
As the effective date for the CFPB's successor in interest and bankruptcy billing statement requirements quickly approaches, one question we've heard multiple times is whether a mortgage servicer is required to know when a confirmed successor in interest is in bankruptcy. The question stems from upcoming provisions in Regulations X and Z that will collectively say, in essence, that a confirmed successor in interest must be treated as if he or she is a borrower for the purposes of the mortgage servicing rules. Combine that mandate with specific requirements in the periodic billing statement and early intervention contexts that apply when "any consumer [or borrower] on a mortgage loan is a debtor in bankruptcy" and it becomes clear why many servicers have wondered whether a confirmed successor in interest's bankruptcy might trigger the various bankruptcy-specific requirements in the mortgage servicing rules.
The full article originally published in the June 2018 issue of Mortgage Compliance Magazine.