Hello,
Just reading through the Small Entity Compliance Guide, trying to pick out some things that might be useful for training.

I ran across this (bolding mine for emphasis)



Now, I’m not a guru on bankruptcy or collections, but my understanding was that if a borrower filed BK, you are no longer allowed to pursue collection activities against them which includes sending periodic statements which would show a payment amount due.

Anyone else have thoughts on this? Am I totally wrong on the BK aspect of it?

We have thought of this as well and are likely going to have to create a separate periodic statement for customers in bankruptcy that will not look like an attempt to collect. So it will not reference amount due, it won't have a coupon attached, etc.

As a small servicer, we are exempt from the periodic statement thankfully.

Be careful in how you determine whether or not you are a small servicer. I have heard some people say "we service fewer than 5,000 mortgage loans per year, so we must be exempt". The determination of whether or not you qualify as a small servicer is more complicated than that. For example, if your institution (or any of its affiliates) services even one mortgage loan you did not originate or do not own, you would not qualify as a small servicer, even if you service 5,000 or fewer loans overall.

Also, remember there is a proposed rule already issued by the CFPB that would add some additional information about how to determine whether or not you are a small servicer. If you are relying on the small servicer exception and haven't read that proposed rule, I would suggest you do so.

Everything has been read and reread, analyzed and accounted for. We are a small servicer at this point and under the proposed rule. Now if they go to another proposed new or clarifying rule, it could all change.
Always need to stay on top of the game.

Does anyone have a link to that proprosed rule regarding small servicers?

Here? https://www.federalregister.gov/articles...ct-regulation-x

Well, wouldn't you know it, the regulations haven't gone through another proposed/clarifying stage, but now my bank wants to purchase loans. However, the "didn't originate or don't own" still wouldn't kick us out of the small servicer definition since we would be the assignee. Correct?

sooo..to rehash this again...i am reading the guide and it states "is there a small servicer exemption to the periodic statement rule? Yes, Small servicers are exempt from ALL requirements of the periodic statement." Do small servicers have to send statements for ARM loans?

(4) Small servicers. (i) Exemption. A creditor, assignee, or servicer is exempt from the requirements of this section for mortgage loans serviced by a small servicer.

(ii) Small servicer defined. A small servicer is a servicer that either:

(A) Services, together with any affiliates, 5,000 or fewer mortgage loans, for all of which the servicer (or an affiliate) is the creditor or assignee; or

(B) Is a Housing Finance Agency, as defined in 24 CFR 266.5.

(iii) Small servicer determination. In determining whether a servicer is a small servicer, the servicer is evaluated based on the mortgage loans serviced by the servicer and any affiliates as of January 1 for the remainder of the calendar year. A servicer that ceases to qualify as a small servicer will have six months from the time it ceases to qualify or until the next January 1, whichever is later, to comply with any requirements from which the servicer is no longer exempt as a small servicer. The following mortgage loans are not considered in determining whether a servicer qualifies as a small servicer:

(A) Mortgage loans voluntarily serviced by the servicer for a creditor or assignee that is not an affiliate of the servicer and for which the servicer does not receive any compensation or fees.

(B) Reverse mortgage transactions.

(C) Mortgage loans secured by consumers' interests in timeshare plans.

If you qualify as a small servicer, you are exempt from all of the section 1026.41 requirements.

How would this affect loans sold to Freddie Mac, servicing done on Bank side? Would this affect the qualification of being a small servicer? Wouldn't this create an exception to the exemption?

Loans sold servicing-retained are counted toward the 5,000 limit. The concept of the small servicer exemption is designed to limit the impact of the rule on servicers with low volume. If you go above the 5,000 limit, including those servicing-retained sold loans, you are presumed to have the capital and capacity to comply with the rule, so the exemption is no longer available.