Earlier this week, NCSHA sent the Consumer Financial Protection Bureau (CFPB) comments on a pair of its proposed rules on loan servicing standards. In both comments, NCSHA expressed concerns about the proposed rules’ potential negative consequences and urged CFPB to amend them to provide HFAs the flexibility they need to best serve consumers. These comments were based on input NCSHA received from several HFAs. For more information on these proposed rules, you can visit NCSHA’s blog post summarizing them. NCSHA has also submitted comments on several other CFPB and Federal Housing Finance Agency (FHFA) proposed rules and notices, as described below.
In this week’s letter responding to the first set of servicing rules, which were issued under the Truth in Lending Act (TILA), NCSHA urged CFPB to include HFAs in its definition of small servicers. This would exempt HFAs from CFPB’s mandate that servicers send borrowers monthly mortgage term sheets. NCSHA’s comments point out that many HFAs face similar operational challenges as small private servicers, and that they also both take a proactive approach to customer service. The letter also requests that CFPB remove its proposed requirement that state HFA contact information be included on both the periodic billing statement and an initial adjustable-rate mortgage interest rate adjustment notice also required by the rule, and that CFPB set an effective date for the rule at a year after it is issued to give servicers adequate time to adjust.
NCSHA’s comments responding to the other set of servicing rules, which were issued under the Real Estate Settlement Procedures Act (RESPA), again expressed concerns that some of the proposed rule’s provisions would place a substantial burden on HFAs. To establish certainty and reduce compliance costs for HFAs, NCSHA asked CFPB to eliminate the provision that would require servicers to respond to oral requests for information or error resolution requests, and instead only require servicers to respond to written requests. This reflects concerns that HFAs have raised about the difficulties of being able to track and classify oral requests.
NCSHA also recommended that CFPB amend its proposed rules regarding force-placed insurance to protect from liability servicers who purchase such coverage for homebuyers that cannot or do not demonstrate they have coverage, as long as the servicer tries in good faith to determine if the borrower is insured. The letter also suggested that CFPB rescind a proposal to require that contact information for state HFAs be included on a written notice that servicers would be required to send borrowers after they miss a payment, and that CFPB provide servicers, particularly small servicers and HFAs, adequate time to adopt the changes called for in the proposed rule.
In addition, NCSHA also recently submitted comments on several other federal rules and notices. On September 7, NCSHA requested that HFA-loan products be exempt from CFPB’s proposed rule expanding the definition of “high-cost mortgage.” NCSHA also sent a letter to the Federal Housing Finance Agency (FHFA) supporting its proposal to prohibit Fannie Mae and Freddie Mac from purchasing loans that are subject to a primary lien PACE loan and not allow any loans they own to be subject to such a lien. Finally, NCSHA also sent a letter in a reply to a notice filed by FHFA expressing concern about recent local government proposals to use eminent domain to purchase and refinance mortgages. NCSHA echoed many of FHFA’s concerns, and urged the agency to discourage the implementation of such initiatives until these concerns can be fully addressed and the potential negative consequences can be avoided or eliminated.