Proposals: Debt Collection Rules & COVID-19 Mortgage Servicing

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The Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking (NPRM) to delay by 60 days the effective date of two final rules issued under the Fair Debt Collection Practices Act (FDCPA). The debt collection rules, issued in late 2020, are scheduled to take effect on November 30, 2021.  The CFPB is proposing to extend the effective date of both rules to January 29, 2022. The proposed delay would allow stakeholders affected by the pandemic additional time to review and implement the rules.

The first debt collection rule, issued in October 2020, focuses on the use of communications related to debt collection, and clarifies prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.

The second debt collection rule, issued in December 2020, clarifies disclosures debt collectors must provide to consumers at the beginning of collection communications. The rule also prohibits debt collectors from making threats to sue, or from suing, consumers on time-barred debt. The rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency. 

The proposal will be open for comment for 30 days following publication in the Federal Register. Read the text of the proposed rule here.

CFPB Issues Proposed COVID-19 Mortgage Servicing Rule
The CFPB has also issued a notice of proposed rulemaking (2021 Mortgage Servicing COVID-19 Proposed Rule) to propose amendments to the bureau’s Mortgage Servicing Rule that would provide additional assistance for borrowers impacted by the COVID-19 emergency. If finalized, it would add to existing Regulation X provisions to help address COVID-19-related hardships.

This includes adding the following:

  • Information servicers would provide to certain borrowers during live contacts.
  • Loan modification options servicers may offer based on an incomplete loss mitigation application in certain circumstances.
  • Establishing a temporary COVID-19 emergency-related, pre-foreclosure review period (added to existing foreclosure protections).

The bureau has also provided a “Fast Facts” summary of the proposed rule and an “Unofficial Redline” of the proposed amendments to Regulation X to assist commenters. You can also view the CFPB’s “Rules on Mortgage Servicing” webpage for a timeline and additional information.

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