The CFPB recently issued its final rule amending the timing requirements for transitioning between unmodified periodic statements and modified statements for consumers in bankruptcy. Initially proposed on October 4, 2017, the CFPB finalized the amendments without further revision. These changes will go into effect on April 19, 2018, along with the other servicing rule amendments adopted in 2016 that require sending periodic statements to consumers in bankruptcy. (Part of the 2016 amendments were implemented in October 2017, and the remaining amendments will be implemented April 19, 2018.)
Under the amended rule, the single billing cycle exemption is replaced with a more uniform single statement exemption, when a mortgage servicer transitions between an unmodified and a modified bankruptcy periodic statement. Accordingly, after a triggering event (e.g., the borrower enters bankruptcy, personal liability is discharged, or the borrower exits bankruptcy), the servicer is exempt from providing the next periodic statement or coupon book that would otherwise be required, regardless of when in the billing cycle the triggering event occurs. As previously drafted, the exemption applied for the next periodic statement or coupon book only if the payment due date for that ensuing billing cycle was 14 days or less after the triggering event.
The amendments provide welcome help to mortgage servicers by eliminating an aspect of the new bankruptcy requirements that was unnecessarily complex and difficult to operationalize.