The Consumer Financial Protection Bureau has released additional guidance and an interim final rule detailing how mortgage servicers should respond when distressed borrowers experience unexpected life events or other legal problems, like a death in the family or bankruptcy.
The guidance indicates that servicers must institute policies to quickly communicate with family members upon a borrower's death, offering solutions for continuing payment or enacting loss mitigation measures. Moreover, the guidance spells out when and how often borrowers must be contacted, with servicers required to attempt contact with every missed mortgage payment. The method of contact varies based on the length of the delinquency and whether the borrower responded to earlier attempts to communicate. The guidance states: "Specifically, servicers must communicate with the borrower with regard to requests for loss mitigation, information requests, error resolution, force-placed insurance, initial interest rate adjustment of adjustable-rate mortgages, and periodic statements. However, servicers will not be required to provide certain early intervention contacts or ongoing notices of interest rate adjustments to delinquent borrowers who have instructed the servicer to stop communicating with them."