CHAPTER 59. MORTGAGE SERVICING Sec.
59.1. Purpose.
59.2. Scope.
59.3. Definitions.
59.4. General disclosure requirements.
59.5. Mortgage servicing transfers.
59.6. Timely escrow payments and treatment of escrow account balances.
59.7. Error resolution procedures.
59.8. Requests for information.
59.9. Force-placed insurance.
59.10. General servicing policies, procedures, and requirements.
59.11. Early intervention requirements for certain borrowers.
59.12. Continuity of contact.
59.13. Loss mitigation procedures.
59.14. Coordination with existing law.
59.15. Additional notices.Authority The provisions of this Chapter 59 issued under the act of December 22, 2017 (P.L. 1260, No. 81) and the Mortgage Licensing Act, 7 Pa.C.S. § § 6101—6154, unless otherwise noted.
Source The provisions of this Chapter 59 adopted April 27, 2018, effective April 28, 2018, 48 Pa.B. 2493, unless otherwise noted.
§ 59.1. Purpose.
In accordance with 7 Pa.C.S. § 6141 (relating to mortgage servicers) this chapter is intended to set forth mortgage servicing criteria and standards that incorporate the Consumer Financial Protection Bureau’s mortgage servicer regulations in 12 CFR Part 1024, Subpart C (relating to mortgage servicing).
§ 59.2. Scope.
This chapter applies to any mortgage loan serviced by a mortgage servicer licensed by the Department under 7 Pa.C.S. § 6111 (relating to license requirements).
§ 59.3. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Confirmed successor in interest—A successor in interest once a servicer has confirmed the successor in interest’s identity and ownership interest in a property that secures a mortgage loan subject to this chapter.
Consumer reporting agency—Has the meaning set forth in section 603 of the Fair Credit Reporting Act (15 U.S.C. § 1681a).
COVID-19-related hardship—A financial hardship due, directly or indirectly, to the National emergency for the COVID-19 pandemic declared in Proclamation 9994 on March 13, 2020 (beginning on March 1, 2020) and continued on February 24, 2021, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. § 1622(d)).
Day—A calendar day.
Delinquency—A period of time during which a borrower and a borrower’s mortgage loan obligation are delinquent. A borrower and a borrower’s mortgage loan obligation are delinquent beginning on the date a periodic payment sufficient to cover principal, interest, and, if applicable, escrow becomes due and unpaid, until such time as no periodic payment is due and unpaid.
Hazard insurance—Insurance on the property securing a mortgage loan that protects the property against loss caused by fire, wind, flood, earthquake, theft, falling objects, freezing, and other similar hazards for which the owner or assignee of such loan requires insurance.
Loss mitigation application—An oral or written request for a loss mitigation option that is accompanied by any information required by a servicer for evaluation for a loss mitigation option.
Loss mitigation option—An alternative to foreclosure offered by the owner or assignee of a mortgage loan that is made available through the servicer to the borrower.
Master servicer—The owner of the right to perform servicing. A master servicer may perform the servicing itself or do so through a subservicer.
Mortgage loan—A loan which is made primarily for personal, family or household use; and secured by any first lien mortgage, deed of trust, or equivalent consensual security interest on a dwelling or on residential real estate, but does not include open-end lines of credit (home equity plans).
Qualified written request—A written correspondence from the borrower to the servicer that includes, or otherwise enables the servicer to identify, the name and account of the borrower, and either:(1) States the reasons the borrower believes the account is in error; or
(2) Provides sufficient detail to the servicer regarding information relating to the servicing of the mortgage loan sought by the borrower.
Reverse mortgage transaction—The meaning set forth in 12 CFR 1026.33(a) (relating to requirements for reverse mortgages).
Service provider—Any party retained by a servicer that interacts with a borrower or provides a service to the servicer for which a borrower may incur a fee.
Single point of contact—An individual or team of personnel, each of whom has the ability and authority to discuss mortgage loan mitigation options with a borrower on behalf of a mortgage servicer. The mortgage servicer shall ensure that each member of the team is knowledgeable about the borrower’s situation and current status.
Subservicer—A servicer that does not own the right to perform servicing, but that performs servicing on behalf of the master servicer.
Successor in interest—A person to whom an ownership interest in a property securing a mortgage loan subject to 12 CFR Part 1024, Subpart C (relating to mortgage servicing) is transferred from a borrower, provided that the transfer is by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; to a relative resulting from the death of a borrower; a transfer where the spouse or children of the borrower become an owner of the property; a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; or a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.
Transferee servicer—A servicer that obtains or will obtain the right to perform servicing pursuant to an agreement or understanding.
Transferor servicer—A servicer, including a table-funding mortgage broker or dealer on a first-lien dealer loan, that transfers or will transfer the right to perform servicing pursuant to an agreement or understanding.
Authority The provisions of this § 59.3 amended under 7 Pa.C.S. § 6141(a)(2).
Source The provisions of this § 59.3 amended September 24, 2021, effective September 25, 2021, 51 Pa.B. 6145. Immediately preceding text appears at serial pages (391217) to (391219).
§ 59.4. General disclosure requirements.
(a) Disclosure requirements.
(1) Form of disclosures. Except as otherwise provided in this chapter, disclosures required under this chapter must be clear and conspicuous, in writing and in a form that a recipient may keep. The disclosures required by this chapter may be provided in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. § § 7001—7031), as set forth in 12 CFR 1024.3 (relating to E-Sign applicability). A servicer may use commonly accepted or readily understandable abbreviations in complying with the disclosure requirements of this chapter.
(2) Foreign language disclosures. Disclosures required under this chapter may be made in a language other than English, provided that the disclosures are made available in English upon a recipient’s request.
(b) Additional information; disclosures required by other laws. Unless expressly prohibited in this chapter, by other applicable law, such as the Truth in Lending Act (15 U.S.C. § § 1601—1667f) or the Truth in Savings Act (12 U.S.C. § § 4301—4313), or by the terms of an agreement with a Federal regulatory agency or the Department, a servicer may include additional information in a disclosure required under this chapter or combine any disclosure required under this chapter with any disclosure required by such other law.
(c) Successors in interest.
(1) Optional notice with acknowledgment form. Upon confirmation, a servicer may provide a confirmed successor in interest who is not liable on the mortgage loan obligation with a written notice together with a separate acknowledgment form that meets the requirements of paragraph (c)(1)(iv) of this section and that does not require acknowledgment of any items other than those identified in paragraph (c)(1)(iv) of this section. The written notice must clearly and conspicuously explain that:
(i) The servicer has confirmed the successor in interest’s identity and ownership interest in the property;
(ii) Unless the successor in interest assumes the mortgage loan obligation under law, the successor in interest is not liable for the mortgage debt and cannot be required to use the successor in interest’s assets to pay the mortgage debt, except that the lender has a security interest in the property and a right to foreclose on the property, when permitted by law and authorized under the mortgage loan contract;
(iii) The successor in interest may be entitled to receive certain notices and communications about the mortgage loan if the servicer is not providing them to another confirmed successor in interest or borrower on the account;
(iv) In order to receive such notices and communications, the successor in interest must execute and provide to the servicer an acknowledgment form that:
(A) Requests receipt of such notices and communications if the servicer is not providing them to another confirmed successor in interest or borrower on the account; and
(B) Indicates that the successor in interest understands that such notices do not make the successor in interest liable for the mortgage debt and that the successor in interest is only liable for the mortgage debt if the successor in interest assumes the mortgage loan obligation under law; and
(C) Informs the successor in interest that there is no time limit to return the acknowledgment but that the servicer will not begin sending such notices and communications to the confirmed successor in interest until the acknowledgment is returned; and
(v) Whether or not the successor in interest executes the acknowledgment described in paragraph (c)(1)(iv) of this section, the successor in interest is entitled to submit notices of error under § 59.7 (relating to error resolution procedures), requests for information under § 59.8 (relating to requests for information), and requests for a payoff statement under 12 CFR 1026.36 (relating to prohibited acts or practices and certain requirements for credit secured by a dwelling) with respect to the mortgage loan account, with a brief explanation of those rights and how to exercise them, including appropriate address information.
(2) Effect of failure to execute acknowledgment. If, upon confirmation, a servicer provides a confirmed successor in interest who is not liable on the mortgage loan obligation with a written notice and acknowledgment form in accordance with paragraph (c)(1) of this section, the servicer is not required to provide to the confirmed successor in interest any written disclosure required by 12 CFR 1024.17 (relating to escrow accounts), or § 59.5, § 59.6, § 59.9, or § 59.11 or to comply with the live contact requirements in § 59.11(a) (relating to early intervention requirements for certain borrowers) with respect to the confirmed successor in interest until the confirmed successor in interest either assumes the mortgage loan obligation under State law or executes an acknowledgment that complies with paragraph (c)(1)(iv) of this section and provides it to the servicer.
(3) Additional copies of acknowledgment form. If a servicer provides a confirmed successor in interest with a written notice and acknowledgment form in accordance with paragraph (c)(1) of this section, the servicer must make additional copies of the written notice and acknowledgment form available to the confirmed successor in interest upon written or oral request.
(4) Multiple notices unnecessary. Except as required by § 59.8, a servicer is not required to provide to a confirmed successor in interest any written disclosure required by 12 CFR 1024.17, or § 59.5, § 59.6, § 59.9, or § 59.11(b) if the servicer is providing the same specific disclosure to another borrower on the account. A servicer is also not required to comply with the live contact requirements set forth in § 59.11(a) with respect to a confirmed successor in interest if the servicer is complying with those requirements with respect to another borrower on the account.
Authority The provisions of this § 59.4 amended under 7 Pa.C.S. § 6141(a)(2).
Source The provisions of this § 59.4 amended September 24, 2021, effective September 25, 2021, 51 Pa.B. 6145. Immediately preceding text appears at serial pages (391219) to (391221).
§ 59.5. Mortgage servicing transfers.
(a) Servicing disclosure statement. Within three days (excluding legal public holidays, Saturdays, and Sundays) after a person applies for a reverse mortgage transaction, the lender, mortgage broker who anticipates using table funding, or dealer in a first-lien dealer loan shall provide to the person a servicing disclosure statement that states whether the servicing of the mortgage loan may be assigned, sold, or transferred to any other person at any time. Appendix MS-1 of 12 CFR Part 1024, Subpart C (relating to mortgage servicing) contains a model form for the disclosures required under this paragraph (a). If a person who applies for a reverse mortgage transaction is denied credit within the three-day period, a servicing disclosure statement is not required to be delivered.
(b) Notices of transfer of loan servicing.
(1) Requirement for notice. Except as provided in paragraph (b)(2) of this section, each transferor servicer and transferee servicer of any mortgage loan shall provide to the borrower a notice of transfer for any assignment, sale, or transfer of the servicing of the mortgage loan. The notice must contain the information described in paragraph (b)(4) of this section. Appendix MS-2 of 12 CFR Part 1024, Subpart C contains a model form for the disclosures required under this paragraph (b).
(2) Certain transfers excluded.
(i) The following transfers are not assignments, sales, or transfers of mortgage loan servicing for purposes of this section if there is no change in the payee, address to which payment must be delivered, account number, or amount of payment due:
(A) A transfer between affiliates;
(B) A transfer that results from mergers or acquisitions of servicers or subservicers;
(C) A transfer that occurs between master servicers without changing the subservicer;
(ii) The Federal Housing Administration (FHA) is not required to provide to the borrower a notice of transfer where a mortgage insured under the National Housing Act is assigned to the FHA.
(3) Time of notice.
(i) In general. Except as provided in paragraphs (b)(3)(ii) and (iii) of this section, the transferor servicer shall provide the notice of transfer to the borrower not less than 15 days before the effective date of the transfer of the servicing of the mortgage loan. The transferee servicer shall provide the notice of transfer to the borrower not more than 15 days after the effective date of the transfer. The transferor and transferee servicers may provide a single notice, in which case the notice shall be provided not less than 15 days before the effective date of the transfer of the servicing of the mortgage loan.
(ii) Extended time. The notice of transfer shall be provided to the borrower by the transferor servicer or the transferee servicer not more than 30 days after the effective date of the transfer of the servicing of the mortgage loan in any case in which the transfer of servicing is preceded by:
(A) Termination of the contract for servicing the loan for cause;
(B) Commencement of proceedings for bankruptcy of the servicer;
(C) Commencement of proceedings by the FDIC for conservatorship or receivership of the servicer or an entity that owns or controls the servicer; or
(D) Commencement of proceedings by the NCUA for appointment of a conservator or liquidating agent of the servicer or an entity that owns or controls the servicer.
(iii) Notice provided at settlement. Notices of transfer provided at settlement by the transferor servicer and transferee servicer, whether as separate notices or as a combined notice, satisfy the timing requirements of paragraph (b)(3) of this section.
(4) Contents of notice. The notices of transfer shall include the following information:
(i) The effective date of the transfer of servicing;
(ii) The name, address, and a collect call or toll-free telephone number for an employee or department of the transferee servicer that can be contacted by the borrower to obtain answers to servicing transfer inquiries;
(iii) The name, address, and a collect call or toll-free telephone number for an employee or department of the transferor servicer that can be contacted by the borrower to obtain answers to servicing transfer inquiries;
(iv) The date on which the transferor servicer will cease to accept payments relating to the loan and the date on which the transferee servicer will begin to accept such payments. These dates shall either be the same or consecutive days;
(v) Whether the transfer will affect the terms or the continued availability of mortgage life or disability insurance, or any other type of optional insurance, and any action the borrower must take to maintain such coverage; and
(vi) A statement that the transfer of servicing does not affect any term or condition of the mortgage loan other than terms directly related to the servicing of the loan.
(c) Borrower payments during transfer of servicing.
(1) Payments not considered late. During the 60-day period beginning on the effective date of transfer of the servicing of any mortgage loan, if the transferor servicer (rather than the transferee servicer that should properly receive payment on the loan) receives payment on or before the applicable due date (including any grace period allowed under the mortgage loan instruments), a payment may not be treated as late for any purpose.
(2) Treatment of payments. Beginning on the effective date of transfer of the servicing of any mortgage loan, with respect to payments received incorrectly by the transferor servicer (rather than the transferee servicer that should properly receive the payment on the loan), the transferor servicer shall promptly either:
(i) Transfer the payment to the transferee servicer for application to a borrower’s mortgage loan account, or
(ii) Return the payment to the person that made the payment and notify such person of the proper recipient of the payment.
Cross References This section cited in 10 Pa. Code § 59.4 (relating to general disclosure requirements); and 10 Pa. Code § 59.13 (relating to loss mitigation procedures).
§ 59.6. Timely escrow payments and treatment of escrow account balances.
(a) Timely escrow disbursements required. If the terms of a mortgage loan require the borrower to make payments to the servicer of the mortgage loan for deposit into an escrow account to pay taxes, insurance premiums, and other charges for the mortgaged property, the servicer shall make payments from the escrow account in a timely manner, that is, on or before the deadline to avoid a penalty, as governed by the requirements in 12 CFR 1024.17(k) (relating to escrow accounts).
(b) Refund of escrow balance.
(1) In general. Except as provided in paragraph (b)(2) of this section, within 20 days (excluding legal public holidays, Saturdays, and Sundays) of a borrower’s payment of a mortgage loan in full, a servicer shall return to the borrower any amounts remaining in an escrow account that is within the servicer’s control.
(2) Servicer may credit funds to a new escrow account. Notwithstanding paragraph (b)(1) of this section, if the borrower agrees, a servicer may credit any amounts remaining in an escrow account that is within the servicer’s control to an escrow account for a new mortgage loan as of the date of the settlement of the new mortgage loan if the new mortgage loan is provided to the borrower by a lender that:
(i) Was also the lender to whom the prior mortgage loan was initially payable;
(ii) Is the owner or assignee of the prior mortgage loan; or
(iii) Uses the same servicer that serviced the prior mortgage loan to service the new mortgage loan.
Cross References This section cited in 10 Pa. Code § 59.4 (relating to general disclosure requirements); and 10 Pa. Code § 59.7 (relating to error resolution procedures).
§ 59.7. Error resolution procedures.
(a) Notice of error. A servicer shall comply with the requirements of this section for any written notice from the borrower that asserts an error and that includes the name of the borrower, information that enables the servicer to identify the borrower’s mortgage loan account, and the error the borrower believes has occurred. A notice on a payment coupon or other payment form supplied by the servicer need not be treated by the servicer as a notice of error. A qualified written request that asserts an error relating to the servicing of a mortgage loan is a notice of error for purposes of this section, and a servicer must comply with all requirements applicable to a notice of error with respect to such qualified written request.
(b) Scope of error resolution. For purposes of this section, the term ‘‘error’’ refers to the following categories of covered errors:
(1) Failure to accept a payment that conforms to the servicer’s written requirements for the borrower to follow in making payments.
(2) Failure to apply an accepted payment to principal, interest, escrow, or other charges under the terms of the mortgage loan and applicable law.
(3) Failure to credit a payment to a borrower’s mortgage loan account as of the date of receipt in violation of 12 CFR 1026.36(c)(1) (relating to prohibited acts or practices and certain requirements for credit secured by a dwelling).
(4) Failure to pay taxes, insurance premiums, or other charges, including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay, in a timely manner as required by § 59.6(a) (relating to timely escrow payments and treatment of escrow account balances), or to refund an escrow account balance as required by § 59.6(b).
(5) Imposition of a fee or charge that the servicer lacks a reasonable basis to impose upon the borrower.
(6) Failure to provide an accurate payoff balance amount upon a borrower’s request in violation of section 12 CFR 1026.36(c)(3).
(7) Failure to provide accurate information to a borrower regarding loss mitigation options and foreclosure, as required by § 59.11 (relating to early intervention requirements for certain borrowers).
(8) Failure to transfer accurately and timely information relating to the servicing of a borrower’s mortgage loan account to a transferee servicer.
(9) Making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process in violation of § 59.13(f) or (j) (relating to loss mitigation procedures).
(10) Moving for foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of § 59.13(g) or (j).
(11) Any other error relating to the servicing of a borrower’s mortgage loan.
(c) Contact information for borrowers to assert errors. A servicer may, by written notice provided to a borrower, establish an address that a borrower must use to submit a notice of error in accordance with the procedures in this section. The notice shall include a statement that the borrower must use the established address to assert an error. If a servicer designates a specific address for receiving notices of error, the servicer shall designate the same address for receiving information requests pursuant to § 59.8(b) (relating to requests for information). A servicer shall provide a written notice to a borrower before any change in the address used for receiving a notice of error. A servicer that designates an address for receipt of notices of error must post the designated address on any Web site maintained by the servicer if the Web site lists any contact address for the servicer.
(d) Acknowledgment of receipt. Within five days (excluding legal public holidays, Saturdays, and Sundays) of a servicer receiving a notice of error from a borrower, the servicer shall provide to the borrower a written response acknowledging receipt of the notice of error.
(e) Response to notice of error.
(1) Investigation and response requirements.
(i) In general. Except as provided in paragraphs (f) and (g) of this section, a servicer must respond to a notice of error by either:
(A) Correcting the error or errors identified by the borrower and providing the borrower with a written notification of the correction, the effective date of the correction, and contact information, including a telephone number, for further assistance; or
(B) Conducting a reasonable investigation and providing the borrower with a written notification that includes a statement that the servicer has determined that no error occurred, a statement of the reason or reasons for this determination, a statement of the borrower’s right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance.
(ii) Different or additional error. If during a reasonable investigation of a notice of error, a servicer concludes that errors occurred other than, or in addition to, the error or errors alleged by the borrower, the servicer shall correct all such additional errors and provide the borrower with a written notification that describes the errors the servicer identified, the action taken to correct the errors, the effective date of the correction, and contact information, including a telephone number, for further assistance.
(2) Requesting information from borrower. A servicer may request supporting documentation from a borrower in connection with the investigation of an asserted error, but may not:
(i) Require a borrower to provide such information as a condition of investigating an asserted error; or
(ii) Determine that no error occurred because the borrower failed to provide any requested information without conducting a reasonable investigation pursuant to paragraph (e)(1)(i)(B) of this section.
(3) Time limits.
(i) In general. A servicer must comply with the requirements of paragraph (e)(1) of this section:
(A) Not later than seven days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the notice of error for errors asserted under paragraph (b)(6) of this section.
(B) Prior to the date of a foreclosure sale or within 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the notice of error, whichever is earlier, for errors asserted under paragraphs (b)(9) and (10) of this section.
(C) For all other asserted errors, not later than 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the applicable notice of error.
(ii) Extension of time limit. For asserted errors governed by the time limit set forth in paragraph (e)(3)(i)(C) of this section, a servicer may extend the time period for responding by an additional 15 days (excluding legal public holidays, Saturdays, and Sundays) if, before the end of the 30-day period, the servicer notifies the borrower of the extension and the reasons for the extension in writing. A servicer may not extend the time period for responding to errors asserted under paragraph (b)(6), (9), or (10) of this section.
(4) Copies of documentation. A servicer shall provide to the borrower, at no charge, copies of documents and information relied upon by the servicer in making its determination that no error occurred within 15 days (excluding legal public holidays, Saturdays, and Sundays) of receiving the borrower’s request for such documents. A servicer is not required to provide documents relied upon that constitute confidential, proprietary or privileged information. If a servicer withholds documents relied upon because it has determined that such documents constitute confidential, proprietary or privileged information, the servicer must notify the borrower of its determination in writing within 15 days (excluding legal public holidays, Saturdays, and Sundays) of receipt of the borrower’s request for such documents.
(5) Omissions in responses to requests for documentation. In its response to a request for documentation under paragraph (e)(4) of this section, a servicer may omit location and contact information and personal financial information (other than information about the terms, status, and payment history of the mortgage loan) if:
(i) The information pertains to a potential or confirmed successor in interest who is not the requester; or
(ii) The requester is a confirmed successor in interest and the information pertains to any borrower who is not the requester.
(f) Alternative compliance.
(1) Early correction. A servicer is not required to comply with paragraphs (d) and (e) of this section if the servicer corrects the error or errors asserted by the borrower and notifies the borrower of that correction in writing within five days (excluding legal public holidays, Saturdays, and Sundays) of receiving the notice of error.
(2) Error asserted before foreclosure sale. A servicer is not required to comply with the requirements of paragraphs (d) and (e) of this section for errors asserted under paragraph (b)(9) or (10) of this section if the servicer receives the applicable notice of an error seven or fewer days before a foreclosure sale. For any such notice of error, a servicer shall make a good faith attempt to respond to the borrower, orally or in writing, and either correct the error or state the reason the servicer has determined that no error has occurred.
(g) Requirements not applicable.
(1) In general. A servicer is not required to comply with the requirements of paragraphs (d), (e), and (i) of this section if the servicer reasonably determines that any of the following apply:
(i) Duplicative notice of error. The asserted error is substantially the same as an error previously asserted by the borrower for which the servicer has previously complied with its obligation to respond pursuant to paragraphs (d) and (e) of this section, unless the borrower provides new and material information to support the asserted error. New and material information means information that was not reviewed by the servicer in connection with investigating a prior notice of the same error and is reasonably likely to change the servicer’s prior determination about the error.
(ii) Overbroad notice of error. The notice of error is overbroad. A notice of error is overbroad if the servicer cannot reasonably determine from the notice of error the specific error that the borrower asserts has occurred on a borrower’s account. To the extent a servicer can reasonably identify a valid assertion of an error in a notice of error that is otherwise overbroad, the servicer shall comply with the requirements of paragraphs (d), (e) and (i) of this section with respect to that asserted error.
(iii) Untimely notice of error. A notice of error is delivered to the servicer more than one year after:
(A) Servicing for the mortgage loan that is the subject of the asserted error was transferred from the servicer receiving the notice of error to a transferee servicer; or
(B) The mortgage loan is discharged.
(2) Notice to borrower. If a servicer determines that, pursuant to this paragraph (g), the servicer is not required to comply with the requirements of paragraphs (d), (e), and (i) of this section, the servicer shall notify the borrower of its determination in writing not later than five days (excluding legal public holidays, Saturdays, and Sundays) after making such determination. The notice to the borrower shall set forth the basis under paragraph (g)(1) of this section upon which the servicer has made such determination.
(h) Payment requirements prohibited. A servicer shall not charge a fee, or require a borrower to make any payment that may be owed on a borrower’s account, as a condition of responding to a notice of error.
(i) Effect on servicer remedies.
(1) Adverse information. After receipt of a notice of error, a servicer may not, for 60 days, furnish adverse information to any consumer reporting agency regarding any payment that is the subject of the notice of error.
(2) Remedies permitted. Except as set forth in this section with respect to an assertion of error under paragraph (b)(9) or (10) of this section, nothing in this section shall limit or restrict a lender or servicer from pursuing any remedy it has under applicable law, including initiating foreclosure or proceeding with a foreclosure sale.
Cross References This section cited in 10 Pa. Code § 59.4 (relating to general disclosure requirements); 10 Pa. Code § 59.8 (relating to requests for information); 10 Pa. Code § 59.10 (relating to general servicing policies, procedures, and requirements); and 10 Pa. Code § 59.12 (relating to continuity of contact).
§ 59.8. Requests for information.
(a) Information request. A servicer shall comply with the requirements of this section for any written request for information from a borrower that includes the name of the borrower, information that enables the servicer to identify the borrower’s mortgage loan account, and states the information the borrower is requesting with respect to the borrower’s mortgage loan. A request on a payment coupon or other payment form supplied by the servicer need not be treated by the servicer as a request for information. A request for a payoff balance need not be treated by the servicer as a request for information. A qualified written request that requests information relating to the servicing of the mortgage loan is a request for information for purposes of this section, and a servicer must comply with all requirements applicable to a request for information with respect to such qualified written request.
(b) Contact information for borrowers to request information. A servicer may, by written notice provided to a borrower, establish an address that a borrower must use to request information in accordance with the procedures in this section. The notice shall include a statement that the borrower must use the established address to request information. If a servicer designates a specific address for receiving information requests, a servicer shall designate the same address for receiving notices of error pursuant to § 59.7(c) (relating to error resolution procedures). A servicer shall provide a written notice to a borrower before any change in the address used for receiving an information request. A servicer that designates an address for receipt of information requests must post the designated address on any Web site maintained by the servicer if the Web site lists any contact address for the servicer.
(c) Acknowledgment of receipt. Within five days (excluding legal public holidays, Saturdays, and Sundays) of a servicer receiving an information request from a borrower, the servicer shall provide to the borrower a written response acknowledging receipt of the information request.
(d) Response to information request.
(1) Investigation and response requirements. Except as provided in paragraphs (e) and (f) of this section, a servicer must respond to an information request by either:
(i) Providing the borrower with the requested information and contact information, including a telephone number, for further assistance in writing; or
(ii) Conducting a reasonable search for the requested information and providing the borrower with a written notification that states that the servicer has determined that the requested information is not available to the servicer, provides the basis for the servicer’s determination, and provides contact information, including a telephone number, for further assistance.
(2) Time limits.
(i) In general. A servicer must comply with the requirements of paragraph (d)(1) of this section:
(A) Not later than 10 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives an information request for the identity of, and address or other relevant contact information for, the owner or assignee of a mortgage loan; and
(B) For all other requests for information, not later than 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the information request.
(ii) Extension of time limit. For requests for information governed by the time limit set forth in paragraph (d)(2)(i)(B) of this section, a servicer may extend the time period for responding by an additional 15 days (excluding legal public holidays, Saturdays, and Sundays) if, before the end of the 30-day period, the servicer notifies the borrower of the extension and the reasons for the extension in writing. A servicer may not extend the time period for requests for information governed by paragraph (d)(2)(i)(A) of this section.
(3) Omissions in responses to requests. In its response to a request for information, a servicer may omit location and contact information and personal financial information (other than information about the terms, status, and payment history of the mortgage loan) if:
(i) The information pertains to a potential or confirmed successor in interest who is not the requester; or
(ii) The requester is a confirmed successor and the information pertains to any borrower who is not the requester.
(e) Alternative compliance. A servicer is not required to comply with paragraphs (c) and (d) of this section if the servicer provides the borrower with the information requested and contact information, including a telephone number, for further assistance in writing within five days (excluding legal public holidays, Saturdays, and Sundays) of receiving an information request.
(f) Requirements not applicable.
(1) In general. A servicer is not required to comply with the requirements of paragraphs (c) and (d) of this section if the servicer reasonably determines that any of the following apply:
(i) Duplicative information. The information requested is substantially the same as information previously requested by the borrower for which the servicer has previously complied with its obligation to respond pursuant to paragraphs (c) and (d) of this section.
(ii) Confidential, proprietary or privileged information. The information requested is confidential, proprietary or privileged.
(iii) Irrelevant information. The information requested is not directly related to the borrower’s mortgage loan account.
(iv) Overbroad or unduly burdensome information request. The information request is overbroad or unduly burdensome. An information request is overbroad if a borrower requests that the servicer provide an unreasonable volume of documents or information to a borrower. An information request is unduly burdensome if a diligent servicer could not respond to the information request without either exceeding the maximum time limit permitted by paragraph (d)(2) of this section or incurring costs (or dedicating resources) that would be unreasonable in light of the circumstances. To the extent a servicer can reasonably identify a valid information request in a submission that is otherwise overbroad or unduly burdensome, the servicer shall comply with the requirements of paragraphs (c) and (d) of this section with respect to that requested information.
(v) Untimely information request. The information request is delivered to a servicer more than one year after:
(A) Servicing for the mortgage loan that is the subject of the information request was transferred from the servicer receiving the request for information to a transferee servicer; or
(B) The mortgage loan is discharged.
(2) Notice to borrower. If a servicer determines that, pursuant to this paragraph (f), the servicer is not required to comply with the requirements of paragraphs (c) and (d) of this section, the servicer shall notify the borrower of its determination in writing not later than five days (excluding legal public holidays, Saturdays, and Sundays) after making such determination. The notice to the borrower shall set forth the basis under paragraph (f)(1) of this section upon which the servicer has made such determination.
(g) Payment requirement limitations.
(1) Fees prohibited. Except as set forth in paragraph (g)(2) of this section, a servicer shall not charge a fee, or require a borrower to make any payment that may be owed on a borrower’s account, as a condition of responding to an information request.
(2) Fee permitted. Nothing in this section shall prohibit a servicer from charging a fee for providing a beneficiary notice under applicable State law, if such a fee is not otherwise prohibited by applicable law.
(h) Servicer remedies. Nothing in this section shall prohibit a servicer from furnishing adverse information to any consumer reporting agency or pursuing any of its remedies, including initiating foreclosure or proceeding with a foreclosure sale, allowed by the underlying mortgage loan instruments, during the time period that response to an information request notice is outstanding.
(i) Potential successors in interest.
(1) With respect to any written request from a person that indicates that the person may be a successor in interest and that includes the name of the transferor borrower from whom the person received an ownership interest and information that enables the servicer to identify the mortgage loan account, a servicer shall respond by providing the potential successor in interest with a written description of the documents the servicer reasonably requires to confirm the person’s identity and ownership interest in the property and contact information, including a telephone number, for further assistance. With respect to the written request, a servicer shall treat the potential successor in interest as a borrower for purposes of the requirements of paragraphs (c) through (g) of this section.
(2) If a written request under paragraph (i)(1) of this section does not provide sufficient information to enable the servicer to identify the documents the servicer reasonably requires to confirm the person’s identity and ownership interest in the property, the servicer may provide a response that includes examples of documents typically accepted to establish identity and ownership interest in a property; indicates that the person may obtain a more individualized description of required documents by providing additional information; specifies what additional information is required to enable the servicer to identify the required documents; and provides contact information, including a telephone number, for further assistance. A servicer’s response under this paragraph (i)(2) must otherwise comply with the requirements of paragraph (i)(1). Notwithstanding paragraph (f)(1)(i) of this section, if a potential successor in interest subsequently provides orally or in writing the required information specified by the servicer pursuant to this paragraph (i)(2), the servicer must treat the new information, together with the original request, as a new, non-duplicative request under paragraph (i)(1), received as of the date the required information was received, and must respond accordingly.
(3) In responding to a request under paragraph (i)(1) of this section prior to confirmation, the servicer is not required to provide any information other than the information specified in paragraphs (i)(1) and (2) of this section. In responding to a written request under paragraph (i)(1) that requests other information, the servicer must indicate that the potential successor in interest may resubmit any request for information once confirmed as a successor in interest.
(4) If a servicer has established an address that a borrower must use to request information pursuant to paragraph (b) of this section, a servicer must comply with the requirements of paragraph (i)(1) of this section only for requests received at the established address.
Cross References This section cited in 10 Pa. Code § 59.4 (relating to general disclosure requirements); 10 Pa. Code § 59.7 (relating to error resolution procedures); 10 Pa. Code § 59.10 (relating to general servicing policies, procedures, and requirements); and 10 Pa. Code § 59.12 (relating to continuity of contact).
§ 59.9. Force-placed insurance.
(a) Definition of force-placed insurance.
(1) In general. For the purposes of this section, the term ‘‘force-placed insurance’’ means hazard insurance obtained by a servicer on behalf of the owner or assignee of a mortgage loan that insures the property securing such loan.
(2) Types of insurance not considered force-placed insurance. The following insurance does not constitute ‘‘force-placed insurance’’ under this section:
(i) Hazard insurance required by the Flood Disaster Protection Act of 1973.
(ii) Hazard insurance obtained by a borrower but renewed by the borrower’s servicer as described in 12 CFR 1024.17(k)(1), (2), or (5) (relating to escrow accounts).
(iii) Hazard insurance obtained by a borrower but renewed by the borrower’s servicer at its discretion, if the borrower agrees.
(b) Basis for charging borrower for force-placed insurance. A servicer may not assess on a borrower a premium charge or fee related to force-placed insurance unless the servicer has a reasonable basis to believe that the borrower has failed to comply with the mortgage loan contract’s requirement to maintain hazard insurance.
(c) Requirements before charging borrower for force-placed insurance.
(1) In general. Before a servicer assesses on a borrower any premium charge or fee related to force-placed insurance, the servicer must:
(i) Deliver to a borrower or place in the mail a written notice containing the information required by paragraph (c)(2) of this section at least 45 days before a servicer assesses on a borrower such charge or fee;
(ii) Deliver to the borrower or place in the mail a written notice in accordance with paragraph (d)(1) of this section; and
(iii) By the end of the 15-day period beginning on the date the written notice described in paragraph (c)(1)(ii) of this section was delivered to the borrower or placed in the mail, not have received, from the borrower or otherwise, evidence demonstrating that the borrower has had in place, continuously, hazard insurance coverage that complies with the loan contract’s requirements to maintain hazard insurance.
(2) Content of notice. The notice required by paragraph (c)(1)(i) of this section shall set forth the following information:
(i) The date of the notice;
(ii) The servicer’s name and mailing address;
(iii) The borrower’s name and mailing address;
(iv) A statement that requests the borrower to provide hazard insurance information for the borrower’s property and identifies the property by its physical address;
(v) A statement that:
(A) The borrower’s hazard insurance is expiring, has expired, or provides insufficient coverage, as applicable;
(B) The servicer does not have evidence that the borrower has hazard insurance coverage past the expiration date or evidence that the borrower has hazard insurance that provides sufficient coverage, as applicable; and
(C) If applicable, identifies the type of hazard insurance for which the servicer lacks evidence of coverage;
(vi) A statement that hazard insurance is required on the borrower’s property, and that the servicer has purchased or will purchase, as applicable, such insurance at the borrower’s expense;
(vii) A statement requesting the borrower to promptly provide the servicer with insurance information;
(viii) A description of the requested insurance information and how the borrower may provide such information, and if applicable, a statement that the requested information must be in writing;
(ix) A statement that insurance the servicer has purchased or purchases:
(A) May cost significantly more than hazard insurance purchased by the borrower;
(B) Not provide as much coverage as hazard insurance purchased by the borrower;
(x) The servicer’s telephone number for borrower inquiries; and
(xi) If applicable, a statement advising the borrower to review additional information provided in the same transmittal.
(3) Format. A servicer must set the information required by paragraphs (c)(2)(iv), (vi), and (ix)(A) and (B) in bold text, except that the information about the physical address of the borrower’s property required by paragraph (c)(2)(iv) of this section may be set in regular text. A servicer may use form MS-3A in appendix MS-3 of 12 CFR Part 1024, Subpart C (relating to mortgage servicing) to comply with the requirements of paragraphs (c)(1)(i) and (2) of this section.
(4) Additional information. Except for the mortgage loan account number, a servicer may not include any information other than information required by paragraph (c)(2) of this section in the written notice required by paragraph (c)(1)(i) of this section. However, a servicer may provide such additional information to a borrower on separate pieces of paper in the same transmittal.
(d) Reminder notice.
(1) In general. The notice required by paragraph (c)(1)(ii) of this section shall be delivered to the borrower or placed in the mail at least 15 days before a servicer assesses on a borrower a premium charge or fee related to force-placed insurance. A servicer may not deliver to a borrower or place in the mail the notice required by paragraph (c)(1)(ii) of this section until at least 30 days after delivering to the borrower or placing in the mail the written notice required by paragraph (c)(1)(i) of this section.
(2) Content of the reminder notice.
(i) Servicer receiving no insurance information. A servicer that receives no hazard insurance information after delivering to the borrower or placing in the mail the notice required by paragraph (c)(1)(i) of this section must set forth in the notice required by paragraph (c)(1)(ii) of this section:
(A) The date of the notice;
(B) A statement that the notice is the second and final notice;
(C) The information required by paragraphs (c)(2)(ii) through (xi) of this section; and
(D) The cost of the force-placed insurance, stated as an annual premium, except if a servicer does not know the cost of force-placed insurance, a reasonable estimate shall be disclosed and identified as such.
(ii) Servicer lacking evidence of continuous coverage. A servicer that has received hazard insurance information after delivering to a borrower or placing in the mail the notice required by paragraph (c)(1)(i) of this section, but has not received, from the borrower or otherwise, evidence demonstrating that the borrower has had sufficient hazard insurance coverage in place continuously, must set forth in the notice required by paragraph (c)(1)(ii) of this section the following information:
(A) The date of the notice;
(B) The information required by paragraphs (c)(2)(ii) through (iv) and (ix) through (xi) and (d)(2)(i)(B) and (D) of this section;
(C) A statement that the servicer has received the hazard insurance information that the borrower provided;
(D) A statement that requests the borrower to provide the information that is missing;
(E) A statement that the borrower will be charged for insurance the servicer has purchased or purchases for the period of time during which the servicer is unable to verify coverage;
(3) Format. A servicer must set the information required by paragraphs (d)(2)(i)(B) and (D) of this section in bold text. The requirements of paragraph (c)(3) of this section apply to the information required by paragraph (d)(2)(i)(C) of this section. A servicer may use form MS-3B in appendix MS-3 of 12 CFR Part 1024, Subpart C to comply with the requirements of paragraphs (d)(1) and (d)(2)(i) of this section. A servicer may use form MS-3C in appendix MS-3 of 12 CFR Part 1024, Subpart C to comply with the requirements of paragraphs (d)(1) and (d)(2)(ii) of this section.
(4) Additional information. Except for the borrower’s mortgage loan account number, a servicer may not include any information other than information required by paragraph (d)(2)(i) or (ii) of this section, as applicable, in the written notice required by paragraph (c)(1)(ii) of this section. However, a servicer may provide such additional information to a borrower on separate pieces of paper in the same transmittal.
(5) Updating notice with borrower information. If a servicer receives new information about a borrower’s hazard insurance after a written notice required by paragraph (c)(1)(ii) of this section has been put into production, the servicer is not required to update such notice based on the new information so long as the notice was put into production a reasonable time prior to the servicer delivering the notice to the borrower or placing the notice in the mail.
(e) Renewing or replacing force-placed insurance.
(1) In general. Before a servicer assesses on a borrower a premium charge or fee related to renewing or replacing existing force-placed insurance, a servicer must:
(i) Deliver to the borrower or place in the mail a written notice containing the information set forth in paragraph (e)(2) of this section at least 45 days before assessing on a borrower such charge or fee; and
(ii) By the end of the 45-day period beginning on the date the written notice required by paragraph (e)(1)(i) of this section was delivered to the borrower or placed in the mail, not have received, from the borrower or otherwise, evidence demonstrating that the borrower has purchased hazard insurance coverage that complies with the loan contract’s requirements to maintain hazard insurance.
(iii) Charging a borrower before end of notice period. Notwithstanding paragraphs (e)(1)(i) and (ii) of this section, if not prohibited by State or other applicable law, if a servicer has renewed or replaced existing force-placed insurance and receives evidence demonstrating that the borrower lacked insurance coverage for some period of time following the expiration of the existing force-placed insurance (including during the notice period prescribed by paragraph (e)(1) of this section), the servicer may, promptly upon receiving such evidence, assess on the borrower a premium charge or fee related to renewing or replacing existing force-placed insurance for that period of time.
(2) Content of renewal notice. The notice required by paragraph (e)(1)(i) of this section shall set forth the following information:
(i) The date of the notice;
(ii) The servicer’s name and mailing address;
(iii) The borrower’s name and mailing address;
(iv) A statement that requests the borrower to update the hazard insurance information for the borrower’s property and identifies the borrower’s property by its physical address;
(v) A statement that the servicer previously purchased insurance on the borrower’s property and assessed the cost of the insurance to the borrower because the servicer did not have evidence that the borrower had hazard insurance coverage for the property;
(vi) A statement that:
(A) The insurance the servicer purchased previously has expired or is expiring, as applicable; and
(B) Because hazard insurance is required on the borrower’s property, the servicer intends to maintain insurance on the property by renewing or replacing the insurance it previously purchased;
(vii) A statement informing the borrower:
(A) That insurance the servicer purchases may cost significantly more than hazard insurance purchased by the borrower;
(B) That such insurance may not provide as much coverage as hazard insurance purchased by the borrower; and
(C) The cost of the force-placed insurance, stated as an annual premium, except if a servicer does not know the cost of force-placed insurance, a reasonable estimate shall be disclosed and identified as such.
(viii) A statement that if the borrower purchases hazard insurance, the borrower should promptly provide the servicer with insurance information.
(ix) A description of the requested insurance information and how the borrower may provide such information, and if applicable, a statement that the requested information must be in writing;
(x) The servicer’s telephone number for borrower inquiries; and
(xi) If applicable, a statement advising a borrower to review additional information provided in the same transmittal.
(3) Format. A servicer must set the information required by paragraphs (e)(2)(iv), (vi)(B), and (vii)(A) through (C) of this section in bold text, except that the information about the physical address of the borrower’s property required by paragraph (e)(2)(iv) may be set in regular text. A servicer may use form MS-3D in appendix MS-3 of 12 CFR Part 1024, Subpart C to comply with the requirements of paragraphs (e)(1)(i) and (2) of this section.
(4) Additional information. Except for the borrower’s mortgage loan account number, a servicer may not include any information other than information required by paragraph (e)(2) of this section in the written notice required by paragraph (e)(1) of this section. However, a servicer may provide such additional information to a borrower on separate pieces of paper in the same transmittal.
(5) Frequency of renewal notices. Before each anniversary of a servicer purchasing force-placed insurance on a borrower’s property, the servicer shall deliver to the borrower or place in the mail the written notice required by paragraph (e)(1) of this section. A servicer is not required to provide the written notice required by paragraph (e)(1) of this section more than once a year.
(f) Mailing the notices. If a servicer mails a written notice required by paragraphs (c)(1)(i), (c)(1)(ii), or (e)(1) of this section, the servicer must use a class of mail not less than first-class mail.
(g) Cancellation of force-placed insurance. Within 15 days of receiving, from the borrower or otherwise, evidence demonstrating that the borrower has had in place hazard insurance coverage that complies with the loan contract’s requirements to maintain hazard insurance, a servicer must:
(1) Cancel the force-placed insurance the servicer purchased to insure the borrower’s property; and
(2) Refund to such borrower all force-placed insurance premium charges and related fees paid by such borrower for any period of overlapping insurance coverage and remove from the borrower’s account all force-placed insurance charges and related fees for such period that the servicer has assessed to the borrower.
(h) Limitations on force-placed insurance charges.
(1) In general. Except for charges subject to State regulation as the business of insurance and charges authorized by the Flood Disaster Protection Act of 1973 (42 U.S.C.A. § § 4001—4131), all charges related to force-placed insurance assessed to a borrower by or through the servicer must be bona fide and reasonable.
(2) Bona fide and reasonable charge. A bona fide and reasonable charge is a charge for a service actually performed that bears a reasonable relationship to the servicer’s cost of providing the service, and is not otherwise prohibited by applicable law.
(i) Relationship to Flood Disaster Protection Act of 1973. If permitted by regulation under section 102(e) of the Flood Disaster Protection Act of 1973 (42 U.S.C.A. § 4012a(e)), a servicer subject to the requirements of this section may deliver to the borrower or place in the mail any notice required by this section and the notice required by section 102(e) of the Flood Disaster Protection Act of 1973 on separate pieces of paper in the same transmittal.
Cross References This section cited in 10 Pa. Code § 59.4 (relating to general disclosure requirements).
§ 59.10. General servicing policies, procedures, and requirements.
(a) Reasonable policies and procedures. A servicer shall maintain policies and procedures that are reasonably designed to achieve the objectives set forth in paragraph (b) of this section.
(b) Objectives.
(1) Accessing and providing timely and accurate information. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can:
(i) Provide accurate and timely disclosures to a borrower as required by this chapter or other applicable law;
(ii) Investigate, respond to, and, as appropriate, make corrections in response to complaints asserted by a borrower;
(iii) Provide a borrower with accurate and timely information and documents in response to the borrower’s requests for information with respect to the borrower’s mortgage loan;
(iv) Provide owners or assignees of mortgage loans with accurate and current information and documents about all mortgage loans they own;
(v) Submit documents or filings required for a foreclosure process, including documents or filings required by a court of competent jurisdiction, that reflect accurate and current information and that comply with applicable law; and
(vi)(A) Upon receiving notice of the death of a borrower or of any transfer of the property securing a mortgage loan, promptly facilitate communication with any potential or confirmed successors in interest regarding the property;
(B) Upon receiving notice of the existence of a potential successor in interest, promptly determine the documents the servicer reasonably requires to confirm that person’s identity and ownership interest in the property and promptly provide to the potential successor in interest a description of those documents and how the person may submit a written request under § 59.8(i) (relating to requests for information) (including the appropriate address); and
(C) Upon the receipt of such documents, promptly make a confirmation determination and promptly notify the person, as applicable, that the servicer has confirmed the person’s status, has determined that additional documents are required (and what those documents are), or has determined that the person is not a successor in interest.
(2) Properly evaluating loss mitigation applications. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can:
(i) Provide accurate information regarding loss mitigation options available to a borrower from the owner or assignee of the borrower’s mortgage loan;
(ii) Identify with specificity all loss mitigation options for which borrowers may be eligible pursuant to any requirements established by an owner or assignee of the borrower’s mortgage loan;
(iii) Provide prompt access to all documents and information submitted by a borrower in connection with a loss mitigation option to servicer personnel that are assigned to assist the borrower pursuant to § 59.12 (relating to continuity of contact);
(iv) Identify documents and information that a borrower is required to submit to complete a loss mitigation application and facilitate compliance with the notice required pursuant to § 59.13(b)(2)(i)(B) (relating to loss mitigation procedures); and
(v) Properly evaluate a borrower who submits an application for a loss mitigation option for all loss mitigation options for which the borrower may be eligible pursuant to any requirements established by the owner or assignee of the borrower’s mortgage loan and, where applicable, in accordance with the requirements of § 59.13.
(vi) Promptly identify and obtain documents or information not in the borrower’s control that the servicer requires to determine which loss mitigation options, if any, to offer the borrower in accordance with the requirements of § 59.13(c)(4).
(3) Facilitating oversight of, and compliance by, service providers. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can:
(i) Provide appropriate servicer personnel with access to accurate and current documents and information reflecting actions performed by service providers;
(ii) Facilitate periodic reviews of service providers, including by providing appropriate servicer personnel with documents and information necessary to audit compliance by service providers with the servicer’s contractual obligations and applicable law; and
(iii) Facilitate the sharing of accurate and current information regarding the status of any evaluation of a borrower’s loss mitigation application and the status of any foreclosure proceeding among appropriate servicer personnel, including any personnel assigned to a borrower’s mortgage loan account as described in § 59.12, and appropriate service provider personnel, including service provider personnel responsible for handling foreclosure proceedings.
(4) Facilitating transfer of information during servicing transfers. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can:
(i) As a transferor servicer, timely transfer all information and documents in the possession or control of the servicer relating to a transferred mortgage loan to a transferee servicer in a form and manner that ensures the accuracy of the information and documents transferred and that enables a transferee servicer to comply with the terms of the transferee servicer’s obligations to the owner or assignee of the mortgage loan and applicable law; and
(ii) As a transferee servicer, identify necessary documents or information that may not have been transferred by a transferor servicer and obtain such documents from the transferor servicer.
(iii) For the purposes of this paragraph (b)(4), transferee servicer means a servicer, including a master servicer or a subservicer, that performs or will perform servicing of a mortgage loan and transferor servicer means a servicer, including a master servicer or a subservicer, that transfers or will transfer the servicing of a mortgage loan.
(5) Informing borrowers of the written error resolution and information request procedures. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer informs borrowers of the procedures for submitting written notices of error set forth in § 59.7 (relating to error resolution procedures) and written information requests set forth in § 59.8.
(c) Standard requirements.
(1) Record retention. A servicer shall retain records that document actions taken with respect to a borrower’s mortgage loan account until one year after the date a mortgage loan is discharged or servicing of a mortgage loan is transferred by the servicer to a transferee servicer.
(2) Servicing file. A servicer shall maintain the following documents and data on each mortgage loan account serviced by the servicer in a manner that facilitates compiling such documents and data into a servicing file within five days:
(i) A schedule of all transactions credited or debited to the mortgage loan account, including any escrow account as defined in 12 CFR 1024.17(b) (relating to escrow accounts) and any suspense account;
(ii) A copy of the security instrument that establishes the lien securing the mortgage loan;
(iii) Any notes created by servicer personnel reflecting communications with the borrower about the mortgage loan account;
(iv) To the extent applicable, a report of the data fields relating to the borrower’s mortgage loan account created by the servicer’s electronic systems in connection with servicing practices; and
(v) Copies of any information or documents provided by the borrower to the servicer in accordance with the procedures set forth in § 59.7 or § 59.13.
§ 59.11. Early intervention requirements for certain borrowers.
(a) Live contact. Except as otherwise provided in this section, a servicer shall establish or make good faith efforts to establish a live single point of contact with a delinquent borrower no later than the 36th day of a borrower’s delinquency and again no later than 36 days after each payment due date so long as the borrower remains delinquent. Promptly after establishing live contact with a borrower, the servicer shall inform the borrower about the availability of loss mitigation options, if appropriate, and take the actions described in subsection (e), if applicable.
(b) Written notice.
(1) Notice required. Except as otherwise provided in this section, a servicer shall provide to a delinquent borrower a written notice with the information set forth in paragraph (b)(2) of this section no later than the 45th day of the borrower’s delinquency and again no later than 45 days after each payment due date so long as the borrower remains delinquent. A servicer is not required to provide the written notice, however, more than once during any 180-day period. If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 180 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent.
(2) Content of the written notice. The notice required by paragraph (b)(1) of this section shall include:
(i) A statement encouraging the borrower to contact the servicer;
(ii) The telephone number to access servicer personnel assigned pursuant to § 59.12(a) (relating to continuity of contact) and the servicer’s mailing address;
(iii) If applicable, a statement providing a brief description of examples of loss mitigation options that may be available from the servicer;
(iv) If applicable, either application instructions or a statement informing the borrower how to obtain more information about loss mitigation options from the servicer; and
(v) The Web site to access either the Consumer Financial Protection Bureau list or the HUD list of homeownership counselors or counseling organizations, and the HUD toll-free telephone number to access homeownership counselors or counseling organizations.
(3) Model clauses. Model clauses MS-4(A), MS-4(B), and MS-4(C), in appendix MS-4 to 12 CFR Part 1024, Subpart C (relating to mortgage servicing) may be used to comply with the requirements of this paragraph (b).
(c) Borrowers in bankruptcy.
(1) Partial exemption. While any borrower on a mortgage loan is a debtor in bankruptcy under title 11 of the United States Code, a servicer, with regard to that mortgage loan:
(i) Is exempt from the requirements of paragraph (a) of this section;
(ii) Is exempt from the requirements of paragraph (b) of this section if no loss mitigation option is available, or if any borrower on the mortgage loan has provided a notification pursuant to section 805(c) of the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C.A. § 1692c(c)) with respect to that mortgage loan as referenced in paragraph (d) of this section; and
(iii) If the conditions of paragraph (c)(1)(ii) of this section are not met, must comply with the requirements of paragraph (b) of this section, as modified by this paragraph (c)(1)(iii):
(A) If a borrower is delinquent when the borrower becomes a debtor in bankruptcy, a servicer must provide the written notice required by paragraph (b) of this section not later than the 45th day after the borrower files a bankruptcy petition under title 11 of the United States Code. If the borrower is not delinquent when the borrower files a bankruptcy petition, but subsequently becomes delinquent while a debtor in bankruptcy, the servicer must provide the written notice not later than the 45th day of the borrower’s delinquency. A servicer must comply with these timing requirements regardless of whether the servicer provided the written notice in the preceding 180-day period.
(B) The written notice required by paragraph (b) of this section may not contain a request for payment.
(C) A servicer is not required to provide the written notice required by paragraph (b) of this section more than once during a single bankruptcy case.
(2) Resuming compliance.
(i) Except as provided in paragraph (c)(2)(ii) of this section, a servicer that was exempt from paragraphs (a) and (b) of this section pursuant to paragraph (c)(1) of this section must resume compliance with paragraphs (a) and (b) of this section after the next payment due date that follows the earliest of the following events:
(A) The bankruptcy case is dismissed;
(B) The bankruptcy case is closed; and
(C) The borrower reaffirms personal liability for the mortgage loan.
(ii) With respect to a mortgage loan for which the borrower has discharged personal liability pursuant to 11 U.S.C.A. § § 727, 1141, 1228, or 1328, a servicer:
(A) Is not required to resume compliance with paragraph (a) of this section; and
(B) Must resume compliance with paragraph (b) of this section if the borrower has made any partial or periodic payment on the mortgage loan after the commencement of the borrower’s bankruptcy case.
(d) Fair Debt Collection Practices Act—partial exemption. With regard to a mortgage loan for which any borrower has provided a notification pursuant to section 805(c) of the Fair Debt Collection Practices Act (FDCPA) (15 U.S.C.A. § 1692c(c)), a servicer subject to the FDCPA with respect to that borrower’s loan:
(1) Is exempt from the requirements of paragraph (a) of this section;
(2) Is exempt from the requirements of paragraph (b) of this section if no loss mitigation option is available, or while any borrower on that mortgage loan is a debtor in bankruptcy under title 11 of the United States Code as referenced in paragraph (c) of this section; and
(3) If the conditions of paragraph (d)(2) of this section are not met, must comply with the requirements of paragraph (b) of this section, as modified by this paragraph (d)(3):
(i) In addition to the information required pursuant to paragraph (b)(2) of this section, the written notice must include a statement that the servicer may or intends to invoke its specified remedy of foreclosure. Model clause MS-4(D) in appendix MS-4 12 CFR Part 1024, Subpart C may be used to comply with this requirement.
(ii) The written notice may not contain a request for payment.
(iii) A servicer is prohibited from providing the written notice more than once during any 180-day period. If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later.
(e) Temporary COVID-19-related live contact. Until October 1, 2022, in complying with the requirements described in subsection (a), promptly after establishing live contact with a borrower the servicer shall take the following actions:
(1) Borrowers not in forbearance programs at the time of live contact. At the time the servicer establishes live contact under subsection (a), if the borrower is not in a forbearance program and the owner or assignee of the borrower’s mortgage loan makes a forbearance program available to borrowers experiencing a COVID-19-related hardship, the servicer shall inform the borrower of all of the following information:
(i) That forbearance programs are available for borrowers experiencing a COVID-19-related hardship and, unless the borrower states that they are not interested in receiving information about these programs, the servicer shall list and briefly describe to the borrower any of these forbearance programs made available at that time and the actions the borrower must take to be evaluated for these forbearance programs.
(ii) At least one way that the borrower can find contact information for homeownership counseling services, such as referencing the borrower’s periodic statement.
(2) Borrowers in forbearance programs at the time of live contact. If the borrower is in a forbearance program made available to borrowers experiencing a COVID-19-related hardship, during the live contact established under subsection (a) that occurs at least 10 days and no more than 45 days before the scheduled end of the forbearance program or, if the scheduled end date of the forbearance program occurs between August 31, 2021, and September 10, 2021, during the first live contact made under subsection (a) after August 31, 2021, the servicer shall inform the borrower of all of the following information:
(i) The date the borrower’s current forbearance program is scheduled to end.
(ii) A list and brief description of each of the types of forbearance extension, repayment options and other loss mitigation options made available to the borrower by the owner or assignee of the borrower’s mortgage loan at the time of the live contact, and the actions the borrower must take to be evaluated for those loss mitigation options.
(iii) At least one way that the borrower can find contact information for homeownership counseling services, such as referencing the borrower’s periodic statement.
Authority The provisions of this § 59.11 amended under 7 Pa.C.S. § 6141(a)(2).
Source The provisions of this § 59.11 amended September 24, 2021, effective September 25, 2021, 51 Pa.B. 6145. Immediately preceding text appears at serial pages (391241) to (391244).
Cross References This section cited in 10 Pa. Code § 59.4 (relating to general disclosure requirements); 10 Pa. Code § 59.7 (relating to error resolution procedures); and 10 Pa. Code § 59.12 (relating to continuity of contact).
§ 59.12. Continuity of contact.
(a) In general. A servicer shall maintain policies and procedures that are reasonably designed to achieve the following objectives:
(1) Assign personnel to a delinquent borrower by the time the servicer provides the borrower with the written notice required by § 59.11(b) (relating to early intervention requirements for certain borrowers), but in any event, not later than the 45th day of the borrower’s delinquency.
(2) Make available to a delinquent borrower, via telephone, personnel assigned to the borrower as described in paragraph (a)(1) of this section to respond to the borrower’s inquiries, and as applicable, assist the borrower with available loss mitigation options until the borrower has made, without incurring a late charge, two consecutive mortgage payments in accordance with the terms of a permanent loss mitigation agreement.
(3) If a borrower contacts the personnel assigned to the borrower as described in paragraph (a)(1) of this section and does not immediately receive a live response from such personnel, ensure that the servicer can provide a live response in a timely manner.
(b) Functions of servicer personnel. A servicer shall maintain policies and procedures reasonably designed to ensure that servicer personnel assigned to a delinquent borrower as described in paragraph (a) of this section perform the following functions:
(1) Provide the borrower with accurate information about:
(i) Loss mitigation options available to the borrower from the owner or assignee of the borrower’s mortgage loan;
(ii) Actions the borrower must take to be evaluated for such loss mitigation options, including actions the borrower must take to submit a complete loss mitigation application, as defined in § 59.13 (relating to loss mitigation procedures), and, if applicable, actions the borrower must take to appeal the servicer’s determination to deny a borrower’s loss mitigation application for any trial or permanent loan modification program offered by the servicer;
(iii) The status of any loss mitigation application that the borrower has submitted to the servicer;
(iv) The circumstances under which the servicer may make a referral to foreclosure; and
(v) Applicable loss mitigation deadlines established by an owner or assignee of the borrower’s mortgage loan or § 59.13.
(2) Retrieve, in a timely manner:
(i) A complete record of the borrower’s payment history; and
(ii) All written information the borrower has provided to the servicer, and if applicable, to prior servicers, in connection with a loss mitigation application;
(3) Provide the documents and information identified in paragraph (b)(2) of this section to other persons required to evaluate a borrower for loss mitigation options made available by the servicer, if applicable; and
(4) Provide a delinquent borrower with information about the procedures for submitting a notice of error pursuant to § 59.7 (relating to error resolution procedures) or an information request pursuant to § 59.8 (relating to requests for information).
Cross References This section cited in 10 Pa. Code § 59.10 (relating to general servicing policies, procedures, and requirements); and 10 Pa. Code § 59.11 (relating to early intervention requirements for certain borrowers).
§ 59.13. Loss mitigation procedures.
(a) Enforcement and limitations. A borrower may enforce the provisions of this section pursuant to section 6(f) of Real Estate Settlement Procedures Act of 1974 (12 U.S.C.A. § 2605(f)). Nothing in this Section imposes a duty on a servicer to provide any borrower with any specific loss mitigation option. Nothing in this Section should be construed to create a right for a borrower to enforce the terms of any agreement between a servicer and the owner or assignee of a mortgage loan, including with respect to the evaluation for, or offer of, any loss mitigation option or to eliminate any such right that may exist pursuant to applicable law.
(b) Receipt of a loss mitigation application.
(1) Complete loss mitigation application. A complete loss mitigation application means an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower. A servicer shall exercise reasonable diligence in obtaining documents and information to complete a loss mitigation application.
(2) Review of loss mitigation application submission.
(i) Requirements. If a servicer receives a loss mitigation application 45 days or more before a foreclosure sale, a servicer shall:
(A) Promptly upon receipt of a loss mitigation application, review the loss mitigation application to determine if the loss mitigation application is complete; and
(B) Notify the borrower in writing within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving the loss mitigation application that the servicer acknowledges receipt of the loss mitigation application and that the servicer has determined that the loss mitigation application is either complete or incomplete. If a loss mitigation application is incomplete, the notice shall state the additional documents and information the borrower must submit to make the loss mitigation application complete and the applicable date pursuant to paragraph (b)(2)(ii) of this section. The notice to the borrower shall include a statement that the borrower should consider contacting servicers of any other mortgage loans secured by the same property to discuss available loss mitigation options.
(ii) Time period disclosure. The notice required pursuant to paragraph (b)(2)(i)(B) of this section must include a reasonable date by which the borrower should submit the documents and information necessary to make the loss mitigation application complete.
(3) Determining protections. To the extent a determination of whether protections under this section apply to a borrower is made on the basis of the number of days between when a complete loss mitigation application is received and when a foreclosure sale occurs, such determination shall be made as of the date a complete loss mitigation application is received.
(c) Evaluation of loss mitigation applications.
(1) Complete loss mitigation application. Except as provided in paragraph (c)(4)(ii) of this section, if a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale, then, within 30 days of receiving the complete loss mitigation application, a servicer shall:
(i) Evaluate the borrower for all loss mitigation options available to the borrower; and
(ii) Provide the borrower with a notice in writing 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. The servicer shall include in this notice the amount of time the borrower has to accept or reject an offer of a loss mitigation program as provided for in paragraph (e) of this section, if applicable, and a notification, if applicable, that the borrower has the right to appeal the denial of any loan modification option as well as the amount of time the borrower has to file such an appeal and any requirements for making an appeal, as provided for in paragraph (h) of this section.
(2) Incomplete loss mitigation application evaluation.
(i) In general. Except as set forth in paragraphs (c)(2)(ii), (iii), (v) and (vi) of this section, a servicer shall not evade the requirement to evaluate a complete loss mitigation application for all loss mitigation options available to the borrower by offering a loss mitigation option based upon an evaluation of any information provided by a borrower in connection with an incomplete loss mitigation application.
(ii) Reasonable time. Notwithstanding paragraph (c)(2)(i) of this section, if a servicer has exercised reasonable diligence in obtaining documents and information to complete a loss mitigation application, but a loss mitigation application remains incomplete for a significant period of time under the circumstances without further progress by a borrower to make the loss mitigation application complete, a servicer may, in its discretion, evaluate an incomplete loss mitigation application and offer a borrower a loss mitigation option. Any such evaluation and offer is not subject to the requirements of this section and shall not constitute an evaluation of a single complete loss mitigation application for purposes of paragraph (i) of this section.
(iii) Short-term loss mitigation options. Notwithstanding paragraph (c)(2)(i) of this section, a servicer may offer a short-term payment forbearance program or a short-term repayment plan to a borrower based upon an evaluation of an incomplete loss mitigation application. Promptly after offering a payment forbearance program or a repayment plan under this paragraph (c)(2)(iii), unless the borrower has rejected the offer, the servicer must provide the borrower a written notice stating the specific payment terms and duration of the program or plan, that the servicer offered the program or plan based on an evaluation of an incomplete application, that other loss mitigation options may be available, and that the borrower has the option to submit a complete loss mitigation application to receive an evaluation for all loss mitigation options available to the borrower regardless of whether the borrower accepts the program or plan. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, and shall not move for foreclosure judgment or order of sale or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of a payment forbearance program or repayment plan offered pursuant to this paragraph (c)(2)(iii). A servicer may offer a short-term payment forbearance program in conjunction with a short-term repayment plan pursuant to this paragraph (c)(2)(iii).
(iv) Facially complete application. A loss mitigation application shall be considered facially complete when a borrower submits all the missing documents and information as stated in the notice required under paragraph (b)(2)(i)(B) of this section, when no additional information is requested in such notice, or once the servicer is required to provide the borrower a written notice pursuant to paragraph (c)(3)(i) of this section. If the servicer later discovers that additional information or corrections to a previously submitted document are required to complete the application, the servicer must promptly request the missing information or corrected documents and treat the application as complete for the purposes of paragraphs (f)(2) and (g) of this section until the borrower is given a reasonable opportunity to complete the application. If the borrower completes the application within this period, the application shall be considered complete as of the date it first became facially complete, for the purposes of paragraphs (d), (e), (f)(2), (g), and (h) of this section, and as of the date the application was actually complete for the purposes of this paragraph (c). A servicer that complies with this paragraph (c)(2)(iv) will be deemed to have fulfilled its obligation to provide an accurate notice under paragraph (b)(2)(i)(B) of this section.
(v) Certain COVID-19-related loss mitigation options.
(A) Notwithstanding subparagraph (i), a servicer may offer a borrower a loss mitigation option based upon evaluation of an incomplete application, provided that all of the following criteria are met:
(I) The loss mitigation option permits the borrower to delay paying covered amounts until the mortgage loan is refinanced, the mortgaged property is sold, the term of the mortgage loan ends or for a mortgage loan insured by the Federal Housing Administration, the mortgage insurance terminates. For purposes of this subclause, ‘‘covered amounts’’ includes, without limitation, all principal and interest payments forborne under a payment forbearance program made available to borrowers experiencing a COVID-19-related hardship, including a payment forbearance program made under section 4022 of the Coronavirus Economic Stabilization Act (15 U.S.C. § 9056); the term also includes, without limitation, all other principal and interest payments that are due and unpaid by a borrower experiencing a COVID-19-related hardship. For purposes of this subclause, ‘‘the term of the mortgage loan’’ means the term of the mortgage loan according to the obligation between the parties in effect when the borrower is offered the loss mitigation option.
(II) Any amounts that the borrower may delay paying as described in subclause (I) do not accrue interest; the servicer does not charge any fee in connection with the loss mitigation option; and the servicer waives all existing late charges, penalties, stop payment fees or similar charges promptly upon the borrower’s acceptance of the loss mitigation option.
(III) The borrower’s acceptance of an offer made under this clause ends any pre-existing delinquency on the mortgage loan.
(B) Once the borrower accepts an offer made under clause (A), the servicer is not required to comply with subsection (b)(1) or (2) with regard to any loss mitigation application the borrower submitted prior to the servicer’s offer of the loss mitigation option described in clause (A).
(vi) Certain COVID-19-related loan modification options.
(A) Notwithstanding subparagraph (i), a servicer may offer a borrower a loan modification based upon evaluation of an incomplete application, provided that all of the following criteria are met:
(I) The loan modification extends the term of the loan by no more than 480 months from the date the loan modification is effective and, for the entire modified term, does not cause the borrower’s monthly required principal and interest payment to increase beyond the monthly principal and interest payment required prior to the loan modification.
(II) If the loan modification permits the borrower to delay paying certain amounts until the mortgage loan is refinanced, the mortgaged property is sold, the loan modification matures or, for a mortgage loan insured by the Federal Housing Administration, the mortgage insurance terminates, those amounts do not accrue interest.
(III) The loan modification is made available to borrowers experiencing a COVID-19-related hardship.
(IV) Either the borrower’s acceptance of an offer under this clause ends any preexisting delinquency on the mortgage loan or the loan modification offered under this clause is designed to end any preexisting delinquency on the mortgage loan upon the borrower satisfying the servicer’s requirements for completing a trial loan modification plan and accepting a permanent loan modification.
(V) The servicer does not charge any fee in connection with the loan modification, and the servicer waives all existing late charges, penalties, stop payment fees or similar charges that were incurred on or after March 1, 2020, promptly upon the borrower’s acceptance of the loan modification.
(B) Once the borrower accepts an offer made under clause (A), the servicer is not required to comply with subsection (b)(1) or (2) with regard to any loss mitigation application the borrower submitted prior to the servicer’s offer of the loan modification described in clause (A). However, if the borrower fails to perform under a trial loan modification plan offered under clause (A) or requests further assistance, the servicer must immediately resume reasonable diligence efforts as required under subsection (b)(1) with regard to any loss mitigation application the borrower submitted prior to the servicer’s offer of the trial loan modification plan and must provide the borrower with the notice required under this clause with regard to the most recent loss mitigation application the borrower submitted prior to the servicer’s offer of the loan modification described in clause (A), unless the servicer has already provided such notice to the borrower.
(3) Notice of complete application.
(i) Except as provided in paragraph (c)(3)(ii) of this section, within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving a borrower’s complete loss mitigation application, a servicer shall provide the borrower a written notice that sets forth the following information:
(A) That the loss mitigation application is complete;
(B) The date the servicer received the complete application;
(C) That the servicer expects to complete its evaluation within 30 days of the date it received the complete application;
(D) That the borrower is entitled to certain foreclosure protections because the servicer has received the complete application, and, as applicable, either:
(I) If the servicer has not made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, that the servicer cannot make the first notice or filing required to commence or initiate the foreclosure process under applicable law before evaluating the borrower’s complete application; or
(II) If the servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, that the servicer has begun the foreclosure process, and that the servicer cannot conduct a foreclosure sale before evaluating the borrower’s complete application;
(E) That the servicer may need additional information at a later date to evaluate the application, in which case the servicer will request that information from the borrower and give the borrower a reasonable opportunity to submit it, the evaluation process may take longer, and the foreclosure protections could end if the servicer does not receive the information as requested; and
(F) That the borrower may be entitled to additional protections under State or Federal law.
(ii) A servicer is not required to provide a notice pursuant to paragraph (c)(3)(i) of this section if:
(A) The servicer has already provided the borrower a notice under paragraph (b)(2)(i)(B) of this section informing the borrower that the application is complete and the servicer has not subsequently requested additional information or a corrected version of a previously submitted document from the borrower pursuant to paragraph (c)(2)(iv) of this section;
(B) The application was not complete or facially complete more than 37 days before a foreclosure sale; or
(C) The servicer has already provided the borrower a notice regarding the application under paragraph (c)(1)(ii) of this section.
(4) Information not in the borrower’s control.
(i) Reasonable diligence. If a servicer requires documents or information not in the borrower’s control to determine which loss mitigation options, if any, it will offer to the borrower, the servicer must exercise reasonable diligence in obtaining such documents or information.
(ii) Effect in case of delay. (A)(1) Except as provided in paragraph (c)(4)(ii)(A)(2) of this section, a servicer must not deny a complete loss mitigation application solely because the servicer lacks required documents or information not in the borrower’s control.
(2) If a servicer has exercised reasonable diligence to obtain required documents or information from a party other than the borrower or the servicer, but the servicer has been unable to obtain such documents or information for a significant period of time following the 30-day period identified in paragraph (c)(1) of this section, and the servicer, in accordance with applicable requirements established by the owner or assignee of the borrower’s mortgage loan, is unable to determine which loss mitigation options, if any, it will offer the borrower without such documents or information, the servicer may deny the application and provide the borrower with a written notice in accordance with paragraph (c)(1)(ii) of this section. When providing the written notice in accordance with paragraph (c)(1)(ii) of this section, the servicer must also provide the borrower with a copy of the written notice required by paragraph (c)(4)(ii)(B) of this section.
(B) If a servicer is unable to make a determination within the 30-day period identified in paragraph (c)(1) of this section as to which loss mitigation options, if any, it will offer to the borrower because the servicer lacks required documents or information from a party other than the borrower or the servicer, the servicer must, within such 30-day period or promptly thereafter, provide the borrower a written notice, informing the borrower:
(1) That the servicer has not received documents or information not in the borrower’s control that the servicer requires to determine which loss mitigation options, if any, it will offer to the borrower on behalf of the owner or assignee of the mortgage;
(2) Of the specific documents or information that the servicer lacks;
(3) That the servicer has requested such documents or information; and
(4) That the servicer will complete its evaluation of the borrower for all available loss mitigation options promptly upon receiving the documents or information.
(C) If a servicer must provide a notice required by paragraph (c)(4)(ii)(B) of this section, the servicer must not provide the borrower a written notice pursuant to paragraph (c)(1)(ii) of this section until the servicer receives the required documents or information referenced in paragraph (c)(4)(ii)(B)(2) of this section, except as provided in paragraph (c)(4)(ii)(A)(2) of this section. Upon receiving such required documents or information, the servicer must promptly provide the borrower with the written notice pursuant to paragraph (c)(1)(ii) of this section.
(d) Denial of loan modification options. If a borrower’s complete loss mitigation application is denied for any trial or permanent loan modification option available to the borrower pursuant to paragraph (c) of this section, a servicer shall state in the notice sent to the borrower pursuant to paragraph (c)(1)(ii) of this section the specific reason or reasons for the servicer’s determination for each such trial or permanent loan modification option and, if applicable, that the borrower was not evaluated on other criteria.
(e) Borrower response.
(1) In general. Subject to paragraphs (e)(2)(ii) and (iii) of this section, if a complete loss mitigation application is received 90 days or more before a foreclosure sale, a servicer may require that a borrower accept or reject an offer of a loss mitigation option no earlier than 14 days after the servicer provides the offer of a loss mitigation option to the borrower. If a complete loss mitigation application is received less than 90 days before a foreclosure sale, but more than 37 days before a foreclosure sale, a servicer may require that a borrower accept or reject an offer of a loss mitigation option no earlier than 7 days after the servicer provides the offer of a loss mitigation option to the borrower.
(2) Rejection.
(i) In general. Except as set forth in paragraphs (e)(2)(ii) and (iii) of this section, a servicer may deem a borrower that has not accepted an offer of a loss mitigation option within the deadline established pursuant to paragraph (e)(1) of this section to have rejected the offer of a loss mitigation option.
(ii) Trial Loan Modification Plan. A borrower who does not satisfy the servicer’s requirements for accepting a trial loan modification plan, but submits the payments that would be owed pursuant to any such plan within the deadline established pursuant to paragraph (e)(1) of this section, shall be provided a reasonable period of time to fulfill any remaining requirements of the servicer for acceptance of the trial loan modification plan beyond the deadline established pursuant to paragraph (e)(1) of this section.
(iii) Interaction with appeal process. If a borrower makes an appeal pursuant to paragraph (h) of this section, the borrower’s deadline for accepting a loss mitigation option offered pursuant to paragraph (c)(1)(ii) of this section shall be extended until 14 days after the servicer provides the notice required pursuant to paragraph (h)(4) of this section.
(f) Prohibition on foreclosure referral.
(1) Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless:
(i) A borrower’s mortgage loan obligation is more than 120 days delinquent;
(ii) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or
(iii) The servicer is joining the foreclosure action of a superior or subordinate lienholder.
(2) Application received before foreclosure referral. If a borrower submits a complete loss mitigation application during the pre-foreclosure review period set forth in paragraph (f)(1) of this section or before a servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, a servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless:
(i) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower’s appeal has been denied;
(ii) The borrower rejects all loss mitigation options offered by the servicer; or
(iii) The borrower fails to perform under an agreement on a loss mitigation option.
(3) Temporary Special COVID-19 Loss Mitigation Procedural Safeguards.
(i) In general. To give a borrower a meaningful opportunity to pursue loss mitigation options, a servicer must ensure that one of the procedural safeguards described in subparagraph (ii) has been met before making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process because of a delinquency under paragraph (1)(i) if:
(A) the borrower’s mortgage loan obligation became more than 120 days delinquent on or after March 1, 2020; and
(B) the statute of limitations applicable to the foreclosure action being taken in the laws of the state where the property securing the mortgage loan is located expires on or after January 1, 2022.
(ii) Procedural safeguards. A procedural safeguard is met if any of the following apply:
(A) Complete loss mitigation application evaluated. The borrower submitted a complete loss mitigation application, remained delinquent at all times since submitting the application and paragraph (2) permitted the servicer to make the first notice or filing required for foreclosure.
(B) Abandoned property. The property securing the mortgage loan is abandoned according to the laws of the state or municipality where the property is located when the servicer makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process.
(C) Unresponsive borrower. The servicer did not receive any communications from the borrower for at least 90 days before the servicer makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process and all of the following conditions are met:
(I) The servicer made good faith efforts to establish live contact with the borrower after each payment due date, as required by 12 CFR 1024.39(a) (relating to Real Estate Settlement Procedures Act (Regulation X)), during the 90-day period before the servicer makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process.
(II) The servicer sent the written notice required by 12 CFR 1024.39(b) at least 10 days and no more than 45 days before the servicer makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process.
(III) The servicer sent all notices required by this section, as applicable, during the 90-day period before the servicer makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process.
(IV) The borrower’s forbearance program, if applicable, ended at least 30 days before the servicer makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process.
(iii) Sunset date. This subparagraph does not apply if a servicer makes the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process on or after January 1, 2022.
(g) Prohibition on foreclosure sale. If a borrower submits a complete loss mitigation application after a servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process but more than 37 days before a foreclosure sale, a servicer shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, unless:
(1) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower’s appeal has been denied;
(2) The borrower rejects all loss mitigation options offered by the servicer; or
(3) The borrower fails to perform under an agreement on a loss mitigation option.
(h) Appeal process.
(1) Appeal process required for loan modification denials. If a servicer receives a complete loss mitigation application 90 days or more before a foreclosure sale or during the period set forth in paragraph (f) of this section, a servicer shall permit a borrower to appeal the servicer’s determination to deny a borrower’s loss mitigation application for any trial or permanent loan modification program available to the borrower.
(2) Deadlines. A servicer shall permit a borrower to make an appeal within 14 days after the servicer provides the offer of a loss mitigation option to the borrower pursuant to paragraph (c)(1)(ii) of this section.
(3) Independent evaluation. An appeal shall be reviewed by different personnel than those responsible for evaluating the borrower’s complete loss mitigation application.
(4) Appeal determination. Within 30 days of a borrower making an appeal, the servicer shall provide a notice to the borrower stating the servicer’s determination of whether the servicer will offer the borrower a loss mitigation option based upon the appeal and, if applicable, how long the borrower has to accept or reject such an offer or a prior offer of a loss mitigation option. A servicer may require that a borrower accept or reject an offer of a loss mitigation option after an appeal no earlier than 14 days after the servicer provides the notice to a borrower. A servicer’s determination under this paragraph is not subject to any further appeal.
(i) Duplicative requests. A servicer must comply with the requirements of this section for a borrower’s loss mitigation application, unless the servicer has previously complied with the requirements of this section for a complete loss mitigation application submitted by the borrower and the borrower has been delinquent at all times since submitting the prior complete application.
(j) Small servicer requirements. A small servicer shall be subject to the prohibition on foreclosure referral in paragraph (f)(1) of this section. A small servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process and shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of an agreement on a loss mitigation option.
(k) Servicing transfers.
(1) In general.
(i) Timing of compliance. Except as provided in paragraphs (k)(2) through (4) of this section, if a transferee servicer acquires the servicing of a mortgage loan for which a loss mitigation application is pending as of the transfer date, the transferee servicer must comply with the requirements of this section for that loss mitigation application within the timeframes that were applicable to the transferor servicer based on the date the transferor servicer received the loss mitigation application. All rights and protections under paragraphs (c) through (h) of this section to which a borrower was entitled before a transfer continue to apply notwithstanding the transfer.
(ii) Transfer date defined. For purposes of this paragraph (k), the transfer date is the date on which the transferee servicer will begin accepting payments relating to the mortgage loan, as disclosed on the notice of transfer of loan servicing pursuant to § 59.5(b)(4)(iv) (relating to mortgage servicing transfers).
(2) Acknowledgment notices.
(i) Transferee servicer timeframes. If a transferee servicer acquires the servicing of a mortgage loan for which the period to provide the notice required by paragraph (b)(2)(i)(B) of this section has not expired as of the transfer date and the transferor servicer has not provided such notice, the transferee servicer must provide the notice within 10 days (excluding legal public holidays, Saturdays, and Sundays) of the transfer date.
(ii) Prohibitions. A transferee servicer that must provide the notice required by paragraph (b)(2)(i)(B) of this section under this paragraph (k)(2):
(A) Shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process until a date that is after the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section, notwithstanding paragraph (f)(1) of this section. For purposes of paragraph (f)(2) of this section, a borrower who submits a complete loss mitigation application on or before the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section shall be treated as having done so during the pre-foreclosure review period set forth in paragraph (f)(1) of this section.
(B) Shall comply with paragraphs (c), (d), and (g) of this section if the borrower submits a complete loss mitigation application to the transferee or transferor servicer 37 or fewer days before the foreclosure sale but on or before the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section.
(3) Complete loss mitigation applications pending at transfer. If a transferee servicer acquires the servicing of a mortgage loan for which a complete loss mitigation application is pending as of the transfer date, the transferee servicer must comply with the applicable requirements of paragraphs (c)(1) and (4) of this section within 30 days of the transfer date.
(4) Applications subject to appeal process. If a transferee servicer acquires the servicing of a mortgage loan for which an appeal of a transferor servicer’s determination pursuant to paragraph (h) of this section has not been resolved by the transferor servicer as of the transfer date or is timely filed after the transfer date, the transferee servicer must make a determination on the appeal if it is able to do so or, if it is unable to do so, must treat the appeal as a pending complete loss mitigation application.
(i) Determining appeal. If a transferee servicer is required under this paragraph (k)(4) to make a determination on an appeal, the transferee servicer must complete the determination and provide the notice required by paragraph (h)(4) of this section within 30 days of the transfer date or 30 days of the date the borrower made the appeal, whichever is later.
(ii) Servicer unable to determine appeal. A transferee servicer that is required to treat a borrower’s appeal as a pending complete loss mitigation application under this paragraph (k)(4) must comply with the requirements of this section for such application, including evaluating the borrower for all loss mitigation options available to the borrower from the transferee servicer. For purposes of paragraph (c) or (k)(3) of this section, as applicable, such a pending complete loss mitigation application shall be considered complete as of the date the appeal was received by the transferor servicer or the transferee servicer, whichever occurs first. For purposes of paragraphs (e) through (h) of this section, the transferee servicer must treat such a pending complete loss mitigation application as facially complete under paragraph (c)(2)(iv) as of the date it was first facially complete or complete, as applicable, with respect to the transferor servicer.
(5) Pending loss mitigation offers. A transfer does not affect a borrower’s ability to accept or reject a loss mitigation option offered under paragraph (c) or (h) of this section. If a transferee servicer acquires the servicing of a mortgage loan for which the borrower’s time period under paragraph (e) or (h) of this section for accepting or rejecting a loss mitigation option offered by the transferor servicer has not expired as of the transfer date, the transferee servicer must allow the borrower to accept or reject the offer during the unexpired balance of the applicable time period.
Authority The provisions of this § 59.13 amended under 7 Pa.C.S. § 6141(a)(2).
Source The provisions of this § 59.13 amended September 24, 2021, effective September 25, 2021, 51 Pa.B. 6145. Immediately preceding text appears at serial pages (391245) to (391254).
Cross References This section cited in 10 Pa. Code § 59.7 (relating to error resolution procedures); 10 Pa. Code § 59.10 (relating to general servicing policies, procedures, and requirements); and 10 Pa. Code § 59.12 (relating to continuity of contact).
§ 59.14. Coordination with existing law.
Nothing in this chapter pre-empts or alters the requirements of the act of January 30, 1974 (P.L. 13, No. 6) (Act 6) (41 P.S. § § 101—605), and the regulations in Chapter 7 (relating to residential real estate transactions), or the requirements of the act of December 23, 1983 (P.L. 385, No. 91) (Act 91), the Homeowners’ Emergency Mortgage Assistance Program and regulations in 12 Pa. Code Chapter 31 (relating to Housing Finance Agency). All mortgage servicing licensees must comply with Acts 6 and 91.
§ 59.15. Additional notices.
All licensees must comply with the notices required under the act of January 30, 1974 (P.L. 13, No. 6) (41 P.S. § § 101—605), found in § 7.4 (relating to notice of intention to foreclose mortgage), and the notice required by the act of December 23, 1983 (P.L. 385, No. 91), the Homeowners’ Emergency Mortgage Assistance Program regulation in 12 Pa. Code § 31.309 (relating to other program requirements).
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