According to Ronald Reagan, the nine most terrifying words in the English language are “I’m from the government and I’m here to help” but my recent experience with the CFPB calls that into question.
During the recent MBA National Mortgage Servicing conference in Dallas, David Silberman, the CFPB's Associate Director of Research, Markets and Regulation, gave a brisk 90 minute review of the bureau's recently released rules for mortgage servicing.
How can I call a 90 minute review brisk? Considering the rules and accompanying analysis check in at over 800 pages, anything less would have provided only a glimpse at what lies within. Instead, Mr. Silberman did an admirable job of running the attendees through the soup to nuts of the meal we will all be consuming for the foreseeable future.
He also acknowledged there will inevitably be questions about the meaning and intent of many of the rules. That's why I was pleased, if somewhat skeptical, when he promoted the Office of Regulation's hotline (202-435-7700) as where you can "ask questions on how to interpret or apply the Bureau’s specific regulations."
Really? OK, then let's give that hotline a test drive.
Since among other things, Varolii helps our servicer clients communicate with borrowers who are behind on their mortgage payments, I was interested in better understanding Section 1024.39 of their Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X) which addresses “Early Intervention Requirements for Certain Borrowers”.
One of these requirements states that:
“A servicer shall establish or make good faith efforts to establish live contact with a delinquent borrower not later than the 36th day of the borrower’s delinquency and, promptly after establishing live contact, inform such borrower about the availability of loss mitigation options if appropriate.”
That is all well and good – we’d expect most servicers to establish contact with their borrowers before they were 36 days past due, even without this rule, to reduce delinquency. But what is meant by "good faith efforts"?
To answer that question, the paragraph continues with the following:
“Good faith efforts to establish live contact consist of reasonable steps under the circumstances to reach a borrower and may include telephoning the borrower on more than one occasion or sending written or electronic communication encouraging the borrower to establish live contact with the servicer."
Now we're getting somewhere, but "electronic communication" isn't defined here or anywhere else in the document.
Time to call the hotline. Here's a rundown of my experience, including a couple of lessons learned should you wish to do the same.
Lesson 1: Don't bother calling. The hotline is answered by a recording that directs you to email your inquiry to email@example.com. So you might as well start there, which I went ahead and did asking:
Would the term "electronic communication" include the following:
- Text messages sent to a mobile phone number provided by the borrower
- Emails sent to an email address provided by the borrower
- Push notifications sent to a smartphone application provided by the lender/servicer and installed by the borrower
- Interactive voice messages delivered to the borrower at a phone number they have provided
After hitting send, I got the following automatic response from the CFPB:
"Thank you for emailing the Consumer Financial Protection Bureau about your question regarding the Bureau’s regulations. Please note that we do not provide written responses to questions and that generally we are not able to respond to questions the same business day. Actual response times will vary depending on the number of questions we are handling and the amount of research needed to answer the question."
A bit disappointing - it seems you have to submit your question in writing, but they are not going to return the favor. And there is no clock ticking on the response time.
So imagine my surprise when less than 4 hours later, I get a call from an attorney at the CFPB.
First the bad news - she tells me I can't rely on what she says as legal advice, then reiterates the prohibition on providing a written response, quipping "what I say is not worth the paper it's written on" (I didn't laugh).
The good news is she said that all four of the methods I asked about would qualify as electronic communications, and if they encouraged the borrower to make live contact with the servicer, would demonstrate the good faith effort required by the rule.
Exactly what I wanted to hear, which brings me to:
Lesson 2: Keep a tape recorder handy. Based on this experience, I'd give the CFPB regulatory hotline a B+ for effort and solid B for results, marking them down only for the ethereal nature of their response. I'd encourage anyone with questions about their rules to try it out. You might even want to ask them the same thing I did to see if they are consistent in their response. If they are, this would be the first time I can honestly say I had a pleasant and productive encounter with a regulator.