Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63295 

1 12 CFR 1024.38(a), (b)(4). 

2 12 CFR 1024.30 defines the scope of application 

of these provisions. Note that small servicers, as 

defined in 12 CFR 1026.41(e)(4), are exempt from 

certain provisions. 

§ 51.3195 U.S. No. 1. 

* * * * * 

(a) * * * 

(1) Similar varietal characteristics, 

except color when designated as a 

specialty or mixed pack; 

* * * * * 

■ 7. In § 51.3197, paragraph (a)(1) is 

revised to read as follows: 

§ 51.3197 U.S. No. 2. 

* * * * * 

(a) * * * 

(1) Similar varietal characteristics, 

except color when designated as a 

specialty or mixed pack; 

* * * * * 

Dated: October 17, 2014. 

Rex A. Barnes, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2014–25193 Filed 10–22–14; 8:45 am] 

BILLING CODE 3410–02–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1024 

Compliance Bulletin and Policy 

Guidance—Mortgage Servicing 

Transfers 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Compliance Bulletin and Policy 

Guidance. 

SUMMARY: The Bureau of Consumer 

Financial Protection (CFPB) is issuing a 

compliance bulletin and policy 

guidance entitled ‘‘Compliance Bulletin 

and Policy Guidance—Mortgage 

Servicing Transfers’’ in light of potential 

risks to consumers that may arise in 

connection with transfers of residential 

mortgage servicing rights. 

DATES: This bulletin is effective October 

23, 2014 and applicable beginning 

August 19, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Allison Brown, Program Manager (202) 

435–7107; Yevgeny Shrago, Attorney, 

(202) 435–7098; or Whitney Patross, 

Attorney (202) 435–7057, Office of 

Supervision Policy. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The CFPB is issuing this compliance 

bulletin and policy guidance to 

residential mortgage servicers and 

subservicers (collectively, servicers), in 

light of potential risks to consumers that 

may arise in connection with transfers 

of residential mortgage servicing rights. 

The CFPB’s concern in this area remains 

heightened due to the continuing high 

volume of servicing transfers. 

Servicers engaged in significant 

servicing transfers should expect that 

the CFPB will, in appropriate cases, 

require them to prepare and submit 

informational plans describing how they 

will be managing the related risks to 

consumers. 

The CFPB is continuing to monitor 

the mortgage servicing market and may 

engage in further rulemaking in this 

area. 

II. Description of Compliance Bulletin 

and Policy Guidance 

This document replaces CFPB 

Bulletin 2013–01 (Mortgage Servicing 

Transfers), released in February 2013, 

which also addressed servicing 

transfers. This document advises 

mortgage servicers that the CFPB will be 

carefully reviewing servicers’ 

compliance with Federal consumer 

financial laws applicable to servicing 

transfers. The revised Regulation X, 

implementing the Real Estate Settlement 

Procedures Act (RESPA) (new servicing 

rule), took effect on January 10, 2014. It 

requires servicers to, among other 

things, maintain policies and 

procedures that are reasonably designed 

to achieve the objectives of facilitating 

the transfer of information during 

mortgage servicing transfers and of 

properly evaluating loss mitigation 

applications.1 Section A of this 

document, ‘‘General Transfer-Related 

Policies and Procedures’’, provides 

examples of general transfer-related 

policies and procedures that CFPB 

examiners may consider in evaluating 

whether servicers have satisfied these 

requirements successfully. The 

examples listed in this section are not 

exhaustive and in future examinations 

CFPB examiners will consider a 

servicer’s transfer-related policies and 

procedures as a whole in determining 

whether they are reasonably designed to 

achieve these objectives. 

Section B, ‘‘Applicability of the New 

Servicing Rules to Transfers’’, answers 

certain frequently asked questions about 

how the revised Regulation X applies in 

the area of servicing transfers. This 

section also describes certain focus 

areas for CFPB examiners and explains 

how entities can minimize compliance 

risk. Section C, ‘‘Protections under 

Federal Consumer Financial Law’’, 

describes other Federal consumer 

financial laws applicable to servicing 

transfers and explains potential 

consequences if servicers are not 

fulfilling their obligations under the 

law. Section D, ‘‘Plans for Handling 

Servicing Transfers’’, informs servicers 

engaged in significant servicing 

transfers that the CFPB will, in 

appropriate cases, require them to 

prepare and submit informational plans 

describing how they will be managing 

the related risks to consumers. 

III. Compliance Bulletin and Policy 

Guidance 

A mortgage servicer, among other 

things, collects and processes loan 

payments on behalf of the owner of the 

mortgage note. Servicing transfers are 

common and may occur in several ways. 

The mortgage owner may sell the rights 

to service the loan, called the Mortgage 

Servicing Rights (MSR), separately from 

the note ownership. The owner of the 

loan or MSR may, rather than servicing 

the loan itself, hire a vendor—typically 

called a subservicer—to take on the 

servicing duties. MSR owners frequently 

sell MSR outright as an asset. Servicing 

transfers may also occur through whole 

loan servicing transfers or whole loan 

portfolio transfers, rather than through 

sales of MSR. In this document, we are 

using the term ‘‘transfer’’ broadly to 

cover transfers of servicing rights as 

well as transfers of servicing 

responsibilities through subservicing or 

whole loan servicing arrangements. 

The CFPB advises mortgage servicers 

that its examiners will be carefully 

reviewing servicers’ compliance with 

Federal consumer financial laws 

applicable to servicing transfers. These 

may include, among others, the RESPA 

and its implementing regulation, 

Regulation X, the Truth in Lending Act 

(TILA) and its implementing regulation, 

Regulation Z, the Fair Credit Reporting 

Act (FCRA) and its implementing 

regulation, Regulation V, the Fair Debt 

Collection Practices Act (FDCPA), and 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act’s prohibitions 

on unfair, deceptive, or abusive acts or 

practices (UDAAPs). 

The provisions of the new servicing 

rule and related commentary that relate 

to transfers can be found at 12 CFR 

1024.33, 12 CFR 1024.38, and 12 CFR 

1024.41.2

A. General Transfer-Related Policies 

and Procedures 

CFPB mortgage servicing 

examinations now include reviews for 

compliance with the new servicing rule. 

Among other things, the rule requires 

servicers to maintain policies and 

procedures that are reasonably designed 

to achieve the objective of facilitating 


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63296 Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 

3 12 CFR 1024.38(a), (b)(4). 

4Section 1024.38(b)(4) does not prescribe any 

specific policies or procedures that a servicer must 

implement; the rule says that the policies and 

procedures must be ‘‘reasonably designed’’ to 

achieve the goal of facilitating the transfer of 

information during servicing transfers. CFPB 

examiners will consider a servicer’s transfer-related 

policies and procedures as a whole, in light of the 

servicer’s particular facts and circumstances, in 

determining whether they are reasonably designed 

to achieve the rule’s objectives. 

5 12 CFR 1024.38(a), (b)(2). 

6 12 CFR 1024, Supp. I, Comment 

1024.38(b)(4)(ii)–1. 7 Id. 

the transfer of information during 

mortgage servicing transfers.3 The 

following are examples of policies and 

procedures that CFPB examiners may 

consider in future examinations as 

contributing to meeting these 

requirements: 4

• Ensuring that contracts require the 

transferor to provide all necessary 

documents and information at loan 

boarding. 

• Developing tailored transfer 

instructions for each deal and 

conducting meetings to discuss and 

clarify key issues with counterparties in 

a timely manner; for large transfers, this 

could be months in advance of the 

transfer. Key issues may include 

descriptions of proprietary 

modifications, detailed descriptions of 

data fields, known issues with 

document indexing, and specific 

regulatory or settlement requirements 

applicable to some or all of the 

transferred loans. 

• Using specifically tailored testing 

protocols to evaluate the compatibility 

of the transferred data with the 

transferee servicer’s systems and data 

mapping protocols. 

• Engaging in quality control work 

after the transfer of preliminary data to 

validate that the data on the transferee’s 

system matches the data submitted by 

the transferor. 

• Recognizing when the transfer 

cannot be implemented successfully in 

a single batch and implementing 

alternative protocols, such as splitting 

the transfer into several smaller 

transactions, to ensure that the 

transferee can comply with its servicing 

obligations for every loan transferred. 

In future examinations, CFPB examiners 

may also consider the following posttransfer policies and procedures, among 

others, for transferee servicers as 

contributing to meeting this 

requirement: 

• Implementing a post-transfer 

process for validating data to ensure it 

transferred correctly and is functional, 

as well as developing procedures for 

identifying and addressing data errors 

for inbound loans. 

• Effectively organizing and labeling 

incoming information, as well as 

ensuring that the transferee servicer 

uses any transferred information before 

seeking information from borrowers. 

• Conducting regularly scheduled 

calls with transferor servicers to identify 

any loan level issues and to research 

and resolve those issues within a few 

days of them being raised. 

Moreover, the new servicing rule 

requires servicers, among other things, 

to maintain policies and procedures that 

are reasonably designed to achieve the 

objective of properly evaluating loss 

mitigation applications.5 There is 

heightened risk inherent in transferring 

loans in loss mitigation, including the 

risk that documents and information are 

not accurately transferred. CFPB 

examiners will therefore pay particular 

attention to servicers’ handling of loss 

mitigation in the context of transfers. In 

cases where servicers choose to engage 

in transfers of loans with pending loss 

mitigation applications or approved trial 

modification plans, CFPB examiners 

may consider the following policies and 

procedures, among others, as 

contributing to meeting this 

requirement: 

• As a transferor, specifically flagging 

all loans with pending loss mitigation 

applications (complete and incomplete), 

as well as approved loss mitigation 

plans (including trial modification 

plans) through a previously agreed upon 

means and assisting in ensuring that the 

transferee’s systems can process the loss 

mitigation data upon transfer. 

• As a transferee, requiring that the 

transferor servicer supply a detailed list 

of loans with pending loss mitigation 

applications, as well as approved loss 

mitigation plans. 

• As a transferee, requiring that 

appropriate documentation for loans 

with pending loss mitigation 

applications, as well as approved loss 

mitigation plans, be transferred preboarding. 

Æ For example, one transferor servicer 

that has engaged in large volumes of 

transfers has provided advance access to 

a web portal containing loan 

documentation for such loans 45–60 

days before transfer. 

• As a transferee, ensuring receipt of 

information regarding any loss 

mitigation discussions with borrowers, 

including any copies of loss mitigation 

documents.6

Æ The transferee servicer’s policies 

and procedures must address obtaining 

any such missing information or 

documents from a transferor servicer 

before attempting to obtain such 

information from borrowers.7

Æ The CFPB expects transferee 

servicers to ensure that they review 

transferred documents to determine if 

the documents may be used in loss 

mitigation efforts. A transferee that, 

following a transfer, requires borrowers 

to resubmit loss mitigation application 

materials is unlikely to have policies 

and procedures that comply with 12 

CFR 1024.38(b)(4). 

Æ A transferee that, following a 

transfer, fails to identify documents and 

information that borrowers are required 

to submit to complete loss mitigation 

applications is unlikely to have policies 

and procedures that comply with 12 

CFR 1024.38(b)(2)(iv). 

Æ A transferee that, following a 

transfer, fails to properly evaluate 

borrowers who submit loss mitigation 

applications is unlikely to have policies 

and procedures that comply with 12 

CFR 1024.38(b)(2)(v). 

• As a transferee, monitoring newly 

transferred loans and determining if 

partial payments received are actually 

payments pursuant to trial or permanent 

modification agreements. 

On the other hand, CFPB examiners 

may consider the following practices, 

among others, as indicating that a 

servicer’s policies and procedures are 

not reasonably designed to achieve the 

rule’s objectives of facilitating the 

transfer of information during mortgage 

servicing transfers or properly 

evaluating loss mitigation applications. 

During a number of examinations, CFPB 

examiners determined that servicers had 

failed to properly identify loans that 

were in a trial or permanent 

modification with the prior servicer at 

time of transfer. In other exams, CFPB 

examiners found that servicers had 

failed to honor trial or permanent 

modification offers unless they could 

independently confirm that the prior 

servicer properly offered a modification 

or that the offered modification met 

investor criteria. In some of these 

instances, CFPB’s examination 

determined that the transferee servicers 

did not obtain all of the information 

they needed from the transferor servicer. 

As a result, the servicers required 

borrowers to submit additional 

paperwork or to provide copies of 

financial documents they had already 

submitted to the transferor servicer. 

These servicers also subjected some 

borrowers to substantial delays while reunderwriting their loans. In some cases, 

the borrowers subsequently received a 

new modification with inferior terms, 

and in others, the servicer actually 


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Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63297 

8Supervisory Highlights is a publication that 

periodically shares general information about 

examination findings without identifying specific 

companies. All editions of Supervisory Highlights 

are available at http://www.consumerfinance.gov/

reports/. 

9The sale date is the date that the money changes 

hands and the parties are legally committed to the 

servicing transfer. 

10 12 CFR 1024.35(g)(1)(iii) and 12 CFR 

1024.36(f)(1)(v). 

11Changes to the terms of an existing force-placed 

insurance policy, such as selecting a new provider, 

changing the scope of coverage, or changing the 

premium owed by the borrower, may meet the 

standards for replacement of the existing forceplaced insurance policy depending on the 

particular circumstances. 

12 12 CFR 1024.39(a). 

13CFPB Bulletin 2013–12 (Implementation 

Guidance for Certain Mortgage Servicing Rules), 

October 15, 2013. 

14 12 CFR 1024.39(b). 

15 12 CFR 1024.40(a). 

conducted a foreclosure sale. In all of 

the cases discussed above, CFPB 

examiners concluded, based on the 

particular facts, that the servicers had 

engaged in unfair practices and directed 

them to adopt policies and procedures 

to prevent continued unfair practices in 

this area and to remediate harmed 

consumers. CFPB has previously 

publicized these findings in Supervisory 

Highlights.8 Certain CFPB examinations, 

which occurred prior to the effective 

date of the new servicing rule, found 

that these practices violated the UDAAP 

prohibition; under the new servicing 

rule such practices may also constitute 

violations of 12 CFR 1024.38. 

Finally, CFPB has received questions 

regarding a policy of transferring 

relevant data or documents to a 

transferee during the days following 

loan boarding, even though the 

transferor had the information in its 

possession prior to boarding. Such a 

transfer practice may prevent the 

transferor servicer from complying with 

its obligation to have policies and 

procedures reasonably designed to 

timely transfer all information and 

documents. It also may prevent the 

transferee servicer from complying with 

its obligation to have policies and 

procedures reasonably designed to 

achieve the objective of properly 

evaluating loss mitigation applications. 

CFPB examiners will carefully 

scrutinize the policies and procedures 

of any institution that regularly waits 

until after loan boarding to transfer 

information that it had in its possession 

prior to boarding. The CFPB recognizes 

that servicers may not legally be able to 

provide certain information prior to the 

sale date; in that event, the CFPB will 

expect that servicers will still make 

every effort to transfer information prior 

to loan boarding, subject to those 

limitations.9

B. Applicability of Other Parts of the 

New Servicing Rule to Transfers 

In addition to the transfer-related 

policies and procedures requirements 

described above, transfers may 

implicate other requirements under the 

new servicing rule: 

Error Resolution Procedures (12 CFR 

1024.35) and Requests for Information 

(12 CFR 1024.36) 

Servicers are required to meet certain 

procedural requirements for responding 

to notices of error and written 

information requests. 

• If the transferee servicer receives a 

notice of error or information request 

from the borrower or the borrower’s 

agent, the transferee servicer must 

comply with all applicable requirements 

under 12 CFR 1024.35 and .36 within 

the regulatory timeframes, even if the 

transferor was servicing the loan at the 

time of the alleged error or the event 

about which information is requested. 

• A transfer does not relieve 

transferor servicers from their 

obligations under 12 CFR 1024.35 and 

.36. Transferor servicers are obligated to 

respond to notices of error and 

information requests received from the 

borrower or borrower’s agent up to one 

year after the loan was transferred or 

discharged.10

• Servicers that transfer a mortgage 

loan shortly after receiving a notice of 

error or information request from the 

borrower or borrower’s agent are still 

obligated to respond within the 

applicable timeframes, notwithstanding 

the servicing transfer. 

Force-Placed Insurance (12 CFR 1024.37 

and 12 CFR 1024.17(k)) 

Before a servicer assesses any 

premium charge or fee related to forceplaced insurance on a borrower, the 

servicer must comply with certain 

requirements, including sending notices 

to the borrower. 

• If the transferee servicer replaces 

the existing force-placed insurance 

policy with a new force-placed 

insurance policy,11 the transferee 

servicer must comply with Regulation 

X’s requirements, including having a 

reasonable basis to conclude the 

borrower has failed to comply with the 

mortgage loan contract’s requirement to 

maintain hazard insurance. The 

transferee servicer must also send the 

notice required by 12 CFR 1024.37(e) 

prior to assessing a premium charge or 

fee on the borrower. 

• If a servicer transfers a mortgage 

loan after mailing or delivering to the 

borrower one or both of the notices 

required by 12 CFR 1024.37(c) and (d), 

the transferee servicer does not need to 

resend the notice(s) that the transferor 

already sent. However, the transferee 

servicer must ensure that the borrower 

has been sent all required notices within 

the applicable timeframes before it may 

assess any premium charge or fee 

related to force-placed insurance. 

Early Intervention (12 CFR 1024.39) 

A servicer must establish or make 

good faith efforts to establish live 

contact with a delinquent borrower not 

later than the 36th day of the borrower’s 

delinquency.12 As clarified in CFPB 

Bulletin 2013–12,13 servicers are 

required to make good faith efforts to 

establish live contact for each billing 

cycle for which a borrower has been 

delinquent for at least 36 days. 

• A transferee servicer must begin or 

continue the good faith efforts 

regardless of whether the delinquency 

began while the loan was being serviced 

by the transferor servicer. 

A servicer must provide to a 

delinquent borrower a written notice 

containing certain information not later 

than the 45th day of the borrower’s 

delinquency.14

• A transferee servicer must comply 

with the written notice requirement 

regardless of whether the delinquency 

began while the loan was being serviced 

by the transferor servicer. 

Continuity of Contact (12 CFR 1024.40) 

Servicers must maintain policies and 

procedures that are reasonably designed 

to achieve certain objectives related to 

personnel assigned to assist delinquent 

borrowers. 

• A transferee servicer’s policies and 

procedures must be reasonably designed 

to achieve these objectives when 

delinquent loans are transferred. In 

future examinations, CFPB examiners 

may consider the following policies and 

procedures, among others, as 

contributing to meeting this 

requirement: 

Æ Identifying which borrowers are 45 

days or more delinquent at transfer and 

ensuring that personnel are available to 

assist such borrowers starting at loan 

boarding.15

Æ Ensuring that these servicer 

personnel can provide the borrower 

with accurate information as required 

by 12 CFR 1024.40(b)(1), including 

information relating to loss mitigation 

applications started at the transferor 

servicer. 


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63298 Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 

16 12 CFR pt. 1024, Supp. I, Comment 1024.41(i)– 

2. 

17 15 U.S.C. 1681s–2(a)(1)(A). The requirement 

does not apply if the furnisher clearly and 

conspicuously specifies to the consumer an address 

for notices of errors. 15 U.S.C. 1681s–2(a)(1)(B)–(C). 

18 15 U.S.C. 1681s–2(e); 12 CFR 1022.42. 

19 15 U.S.C. 1681i(a)(1), 1681s–2(a)(8); 12 CFR 

1022.43. 

20 15 U.S.C. 1681s–2(a)(3), (8), (b). 

21 15 U.S.C. 1692a(6). 

22 15 U.S.C. 1692g(a). The requirement does not 

apply if the information is contained in the initial 

communication or the consumer has paid the debt. 

Id. 

23 15 U.S.C. 1692d, 1692e, 1692f. 

Æ Ensuring, pursuant to 12 CFR 

1024.40(b)(2), that servicer personnel 

can retrieve, in a timely manner: 

D A complete record of the borrower’s 

payment history, including with the 

transferor servicer and all prior 

servicers, and 

D All written information the 

borrower has provided to the transferor 

servicer and all prior servicers in 

connection with a loss mitigation 

application. 

• Servicers also should consider how 

to inform delinquent borrowers of the 

availability of servicer personnel. For 

example, the customer service 

telephone number could be included in 

the Welcome Letter or early intervention 

communications required by Regulation 

X or other communications following 

the transfer. 

Loss Mitigation (12 CFR 1024.41) 

As stated above, CFPB examiners will 

pay particular attention to servicers’ 

handling of loss mitigation in the 

context of transfers. A transferee that 

obtains the servicing of a mortgage loan 

for which an evaluation of a complete 

loss mitigation option is in process 

should continue the evaluation of the 

complete loss mitigation application to 

the extent practicable.16

• CFPB examiners will carefully 

scrutinize any evaluations that take 

longer than 30 days from the date the 

transferor received the borrower’s 

complete application, especially where 

the borrower suffered negative 

consequences attributable to the delay. 

As discussed above, in cases where 

servicers choose to engage in transfers of 

loans with pending loss mitigation 

applications or approved trial 

modification plans, among the policies 

and procedures that CFPB examiners 

may consider as contributing to meeting 

the requirements under 12 CFR 

1024.38(b)(4), are whether the transferee 

servicer obtained information regarding 

loss mitigation discussions from the 

transferor before attempting to obtain 

such information from a borrower. If a 

loan is transferred with a loss mitigation 

application pending or when a borrower 

is in a loss mitigation program, the 

transferor and transferee should manage 

their risk of non-compliance with 12 

CFR 1024.41. One way to help manage 

this risk is by ensuring that all 

applicable loss mitigation information 

was sent to the transferee by the date of 

transfer, including, for example: 

Before the Borrower Accepts an Offer 

• All applicable loss mitigation 

notices and when they were sent, 

including: 

Æ Acknowledgment notices required 

by 12 CFR 1024.41(b)(2)(i)(B); 

Æ Notices stating the servicer’s 

determination of which loss mitigation 

options, if any, it will offer to the 

borrower on behalf of the owner or 

assignee of the mortgage loan, as 

required by 12 CFR 1024.41(c)(1)(ii); 

Æ Denial notices as required by 12 

CFR 1024.41(d), and 12 CFR 1024(h)(4); 

• All documents and information 

submitted by a borrower to be evaluated 

for loss mitigation options; and 

• Documents and information 

sufficient to show, as applicable: 

Æ If a borrower submitted an 

application and when that application 

was received by the transferor servicer; 

Æ Whether documentation and 

information submitted by a borrower in 

response to the notice required by 12 

CFR 1024.41(b)(2)(i)(B) constituted a 

complete application or not; 

Æ The date the transferor servicer 

received a complete application; 

D If, and when, the servicer requested 

additional documents or information, 

and if, and when, the borrower provided 

them; 

Æ Whether an evaluation had been 

completed and if a loss mitigation offer 

was made to a borrower; 

Æ If the borrower was denied for a 

loan modification option, whether the 

borrower appealed and, if so, the status 

of the appeal; and 

Æ If a foreclosure sale is pending: 

D The current date of the foreclosure 

sale; 

D Whether a borrower submitted a 

complete application more than 37 days 

before the foreclosure sale; and 

D Instructions to and from foreclosure 

counsel to ensure compliance with 12 

CFR 1024.41(g), including instructions 

and status of all necessary stays, 

continuances and/or dismissals. 

After the Borrower Accepts an Offer 

• All loss mitigation agreements, 

including trial and permanent loan 

modification agreements, forbearance 

agreements, short sale agreements, deedin-lieu of foreclosure agreements, or 

other applicable agreements; 

• Documents and information 

sufficient to show, as applicable, 

whether the borrower accepted an offer; 

and whether the borrower was 

performing in accordance with the 

terms of the offer. 

C. Protections Under Federal Consumer 

Financial Law 

Other federal consumer financial laws 

may also apply in the transfer context. 

The FCRA provides protection for 

consumers by generally prohibiting the 

furnishing of information to a consumer 

reporting agency that the furnisher 

knows or has reasonable cause to 

believe is inaccurate.17 A servicer that 

furnishes information to consumer 

reporting agencies must establish and 

implement reasonable written policies 

and procedures regarding the accuracy 

and integrity of the information 

furnished; in doing so, the servicer must 

consider applicable federal guidelines 

and must periodically review the 

policies and procedures and update 

them as necessary to ensure their 

continued effectiveness.18 The FCRA 

also gives consumers the ability to 

dispute credit reporting information 

with consumer reporting agencies and 

directly with their furnishers.19

Servicers, like other furnishers, must 

appropriately investigate such disputes 

and report their existence along with 

any other information reported to 

consumer reporting agencies.20

The FDCPA imposes obligations on 

servicers to the extent they act as debt 

collectors within the meaning of the 

FDCPA.21 Among other obligations, the 

FDCPA requires that within five days 

after the initial communication with a 

borrower in connection with the 

collection of any debt, a debt collector 

must send the borrower a notice 

including the amount of the debt, the 

creditor’s name, the borrower’s right to 

request verification of the debt, and 

other required information.22 CFPB 

examiners have identified a number of 

entities that failed to send the notices 

within five days of initial contact and 

some entities that failed to send them at 

all. The FDCPA also prohibits deceptive 

representations, the use of unfair or 

unconscionable means, and harassing or 

abusive conduct in debt collection.23

In addition to the notice requirements 

and other consumer protections 

described above, servicers must avoid 

engaging in UDAAPs. The CFPB 

emphasizes that conduct that does not 

violate one of the specific prohibitions 


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Federal Register / Vol. 79, No. 205 / Thursday, October 23, 2014 / Rules and Regulations 63299 

24The CFPB Supervision and Examination 

Manual provides further guidance on how the 

UDAAP prohibition applies to supervised entities. 

That examination manual is available at http://

www.consumerfinance.gov/guidance/supervision/

manual. 

in the laws discussed above may 

nonetheless constitute a UDAAP.24

CFPB expects all servicers under its 

jurisdiction, including those with 

significant transfer volume, to maintain 

a robust Compliance Management 

System (CMS). A robust CMS must, 

among other things, both ensure that 

violations of Federal consumer financial 

law do not occur during a transfer and 

must contain mechanisms for promptly 

identifying and remediating any 

violations of Federal consumer financial 

law that do occur. Entities with a robust 

CMS have strong policies and 

procedures, effective board oversight, 

regular and properly directed training, 

internal monitoring, external audits and 

complaint review. 

CFPB expects servicers that identify 

any potential violations during a 

transfer to undertake all necessary 

corrective measures. Such corrective 

measures should include both steps to 

prevent the violation from occurring for 

subsequently transferred loans and to 

remediate any actual harm the violation 

may have caused the consumer whose 

loan was transferred. If the CFPB 

determines that a servicer has engaged 

in any acts or practices that violate the 

new servicing rule, that are unfair, 

deceptive, or abusive, or that otherwise 

violate Federal consumer financial law, 

it will take appropriate supervisory and 

enforcement actions to address 

violations and seek all appropriate 

corrective measures, including 

remediation of any harm to consumers. 

In determining the appropriate action, 

the CFPB will consider a variety of 

factors, including the timeliness of 

identification and the timeliness and 

scope of remediation of the violation by 

the servicer. 

D. Plans for Handling Servicing 

Transfers 

As part of its efforts to focus 

supervisory attention on the topics 

described above, the CFPB will, in 

appropriate cases, require servicers 

engaged in significant servicing 

transfers to prepare and submit written 

plans to the CFPB detailing how they 

will manage the associated consumer 

risks. The CFPB will use these plans to 

assess consumer risk and inform further 

examination planning. Servicers do not 

need approval from the CFPB before 

moving forward with servicing transfers 

unless specifically required to do so 

(e.g., by a consent order). 

The information included in a plan 

would depend on the circumstances of 

the particular transfer. In general, 

however, the CFPB will request 

information regarding: 

1. The number of loans involved in 

the transfer; 

2. The total servicing volume being 

transferred (measured by unpaid 

principal balance); 

3. The name(s) of the servicing 

platform(s) on which the transferor 

stored all relevant account-level 

information for transferred loans prior 

to transfer and information about 

compatibility with the transferee’s 

systems; 

4. A detailed description of how the 

servicer will ensure that it is complying 

with the applicable new servicing rule 

provisions on transfers; 

5. A detailed description of the 

transaction and system testing to be 

conducted to ensure accurate transfer of 

electronic information and a description 

of the summary report resulting from 

the transferee or transferor’s testing; 

6. A description of how the transferee 

will identify and correct errors 

identified in connection with the 

transfer, including a specified time 

period for reviewing files and resolving 

errors; 

7. A description of the training plan 

and actual training materials for staff 

involved in reviewing, assessing, 

utilizing, or communicating information 

regarding the transferred loans; and 

8. A customer-service plan, specific to 

the transferred loans, that provides for 

responding to loss mitigation requests or 

inquiries and for identifying whether a 

loan is subject to a pending loss 

mitigation resolution or application. 

IV. Regulatory Requirements 

This Compliance Bulletin and Policy 

Guidance is a non-binding compliance 

bulletin and policy guidance 

articulating considerations relevant to 

the CFPB’s exercise of its supervisory 

authority under Regulation X and 

RESPA and reciting certain 

requirements of Regulation X and other 

Federal consumer financial laws 

applicable to servicing transfers. It is 

therefore exempt from the notice and 

comment rulemaking requirements 

under the Administrative Procedure Act 

pursuant to 5 U.S.C. 553(b). 

Because no notice of proposed 

rulemaking is required, the Regulatory 

Flexibility Act does not require an 

initial or final regulatory flexibility 

analysis. 5 U.S.C. 603(a), 604(a). 

The CFPB has determined that this 

Compliance Bulletin and Policy 

Guidance does not impose any new or 

revise any existing recordkeeping, 

reporting, or disclosure requirements on 

covered entities or members of the 

public that would be collections of 

information requiring OMB approval 

under the Paperwork Reduction Act, 44 

U.S.C. 3501, et seq. 

Dated: October 7, 2014. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2014–24194 Filed 10–22–14; 8:45 am] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 25 

[Docket No. FAA–2014–0698; Special 

Conditions No. 25–567–SC] 

Special Conditions: Bombardier 

Aerospace, Models BD–500–1A10 and 

BD–500–1A11 Series Airplanes; 

Airplane Electronic System Security 

Protection From Unauthorized External 

Access 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final special conditions; 

corrections. 

SUMMARY: This document corrects two 

errors that appeared in Docket No. 

FAA–2014–0698, Special Conditions 

No. 25–567–SC, which was published in 

the Federal Register on September 12, 

2014 (79 FR 54574). There is an error in 

the header information and in one 

instance of one of the airplane model 

numbers in the publication. 

DATES: The effective date of this 

correction is October 23, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Varun Khanna, FAA, Airplane and 

Flight Crew Interface Branch, ANM– 

111,Transport Airplane Directorate, 

Aircraft Certification Service, 1601 Lind 

Avenue SW., Renton, Washington 

98057–3356; telephone (425) 227–1298; 

facsimile (425) 227–1149. 

SUPPLEMENTARY INFORMATION: On 

September 12, 2014, the Federal 

Register published document 

designated as ‘‘Docket No. FAA–2014– 

0698, Notice No. 25–567–SC,’’ (79 FR 

54574). The document issued special 

conditions pertaining to network 

security in the digital systems 

architecture, access from external 

sources, on the BD–500–1A10 and BD– 

500–1A11 series airplanes. 

As published, the document 

contained two errors: 


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