Your complaint response policies for 2014 changes: Part 2
Today we follow up on last week's topic discussing responding to borrowers under the Federal changes to servicing regulations in 2014. Please send in your thoughts and criticism, that's what keeps us going!
In last week's article, we discussed responding to consumer complaints, and focused on mandatory deadlines for responding to consumers that stem from Federal regulations new in 2014. As usual, we received a number of interesting comments and follow-up questions. One of these we'd like to share with you today.
Question:
Just as a follow-up to your very helpful notes- what if you suspect that the person is inquiring about an account in order to do you harm? Can you ask for a reason? Can you narrow the request?
For instance, I attended a seminar on "How to win money from a bank by alleging TILA violations" (thinking it is always good to see how the other team makes their ammo) and this was the recommendation from plaintiff's counsel:
"If your client comes in with a tale of woe that you think could lead to a TILA case (especially refi/rescission/delinquency and possible attorneys' fees), but they don't have the necessary documents for you to do a review, just call up the closing attorney and ask for them. Those guys are such suckers that they never ask what you want it for; they never know enough to realize they or their client screwed up; and they are so stupid that they don't even ask for reimbursement on the copy charges!"
So, as I said, is there any protection in the rules for a lender who fears that they are just aiding and abetting someone who wants to do them harm?
Our Thoughts:
Well, yes and no. There's nothing precisely in the regulations that directly helps lenders avoid vindictive borrowers; probably because the CFPB (authors of the rule) assume lenders either did everything perfectly, or should pay up.
But there are things in the rules that can help lenders in this situation. Note: There are some variations between the requirements that apply with Notices of Error and Requests for Information, so please just keep that in mind.
First, if you're suspicious of a borrower and want to best prepare yourself, you are permitted to ask the borrower for more information. (However, you will still need to respond, whether or not the borrower provides that information).
Second, you don't have to respond to a request for information or notice of error in the following situations:
(1)Duplicative.
You do not have to respond to a Notice of Error or Request for Information that is duplicative. The test for "duplicative" = it is "substantially the same" as a previous one that the lender/servicer responded to. An error/request is not duplicative where the borrower provides "new and material" information.
(2)Overbroad.
A request/error notice is overbroad (and thus improper) where the servicer cannot reasonably determine from the notice the specific error that the borrower asserts or where the borrower requests an unreasonable volume of documents or information.
Some examples include:
Errors in a form that is not reasonably understandable
Asserted error that regards substantially all aspects of a mortgage loan, including errors relating to all aspects of origination, servicing, and foreclosure
(3)Untimely.
A request is untimely (and therefore, you don't have to respond) where it is delivered more than 1 year after EITHER (1) servicing was transferred from the servicer responsible for the alleged error to a new servicer (or, in the case of information requests, more than 1 year after the servicer receiving the information request had transferred servicing) OR (2) the mortgage was paid in full.
*For requests for information only (not notices of error)-- there are several other cases where the servicer does not have to respond:
(4*) Unduly Burdensome.
A servicer does not have to respond to a request for information if the request is unduly burdensome. This means that a diligent servicer could not respond to the request without (a) exceeding the maximum time limit to respond, OR (b) incurring costs (including dedicating resources) that would be unreasonable under the circumstances.
(5*) Confidential, proprietary, or privileged.
Servicer does not have to respond if the information requested is confidential, proprietary, or privileged.
(6*) Irrelevant.
You cannot be forced to provide "irrelevant" information. Information is "irrelevant" where it is not directly related to the borrower's mortgage account. Note: This has the potential to be a fairly broad exception, but take care to use carefully ... there's probably less risk in responding unnecessarily (wasting your resources) than to refusing to respond without justification (regulatory violations and reputational harm).
Otherwise, if a borrower asks for information, you will need to provide it if you have it (sorry, no way around this). But keep in mind this doesn't require you keep more information than already required - if you don't have it, you can't and don't have to provide it.
Now, to keep this all in context, the safest approach will most often be to simply investigate and respond to the borrower's request. However, to the extent that you're concerned with protecting yourself, it may be helpful to get comfortable with these rules in order to avoid being taken advantage of.
Final Note: Even though in some cases you do not need to respond, you will still need to notify the borrower that you will not be responding (I know, I know ...). What I mean is, even if you're not required to investigate or provide documentation, you will still need to notify the borrower that you are refusing to do so. For example, if you find the borrower's request to be "overbroad" or "duplicative."
Other news/thoughts/trivia:
Not sure whether to list your licensing information on company "swag" (stuff we all get)? The Mass. DOB recently clarified its position on this. Generally, you should list your information where you elicit a response from the borrower, but not otherwise. For example, Bank's name on back of little league baseball jersey: no licensing information. But- Bank's name and loan officer's phone number on free pad of paper, the licensing information is more likely required.
Have you ever had someone ahead of you randomly pay for your coffee or pay your toll? Well, you might be part of a "pay it forward" line ... where strangers keep paying for the person behind them, as a random act of kindness. Just wanted you to know, so that you don't wind up like this poor person and make sure you keep the chain alive - unlike this poor person, who (accidentally?) ended a 10- hour chain of 457 people buying each other coffee.
The FHA has eliminated "post payment" interest charges. Here's the link to the Federal Register if interested in investigating further.
Last week we noted that the CFPB had adjusted the HOEPA/QM points & fees thresholds ... here is a chart of the revised changes:
With almost all of our business built on referrals and/or old friendships, we have to guard our reputation ferociously. We just celebrated the 23rd anniversary of John founding SCA, and we wouldn't be here if we hadn't always done that. Lucky for me, it's not so hard thanks to the people I work with. Hopefully you always find people from SCA warm and competent- and always focused on providing value to others.
"Character is much easier kept than recovered."
- Thomas Paine
Thanks so much for reading our weekly newsletters. We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy. Your calls and e-mails are very helpful - please keep contributing.
**These are our opinions. We're not authorized, or willing, to express those of others.**