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#1852443 - 09/16/13 02:07 PM periodic statements and bankruptcy laws
SouthernBanker Offline
Member

Registered: 08/30/11
Posts: 88
The CFPB guide on the Mtg Servicing rules states on page 21 that you must continue to issue periodic statements even if the consumer is delinquent or in bankruptcy. Obviously, bankruptcy laws prohibit collection activities including issuing periodic statements that show an amount due.

How are others designing their statements or procedures to meet these two conflicting laws? We're currently designing our process and would appreciate any tips or insight from others.

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Mortgage Servicing Rules
#1852505 - 09/16/13 02:58 PM Re: periodic statements and bankruptcy laws [Re: SouthernBanker]
GoJays Offline
Junior Member

Registered: 01/09/13
Posts: 25
We are designing a separate statement for customers in bankruptcy that removes any language that could be interpreted as an attempt to collect.

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#1853001 - 09/17/13 02:38 PM Re: periodic statements and bankruptcy laws [Re: SouthernBanker]
SouthernBanker Offline
Member

Registered: 08/30/11
Posts: 88
Thanks GoJays. Do you plan to include any additional disclosure language specifying that this is not an attempt to collect? How will you explain the amount due for a delinquent borrower?

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#1853005 - 09/17/13 02:52 PM Re: periodic statements and bankruptcy laws [Re: SouthernBanker]
GoJays Offline
Junior Member

Registered: 01/09/13
Posts: 25
The Supplementary information for Reg Z provided a little guidance and there is a footnote with some language that we plan to use.
Footnote 125 "For example, servicers may include a
statement such as: ‘‘To the extent your original
obligation was discharged, or is subject to an
automatic stay of bankruptcy under Title 11 of the
United States Code, this statement is for compliance
and/or informational purposes only and does not
constitute an attempt to collect a debt or to impose
personal liability for such obligation. However,
Creditor retains rights under its security instrument,
including the right to foreclose its lien.’’

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