CFPB Issues Debt Collection Guidance and Creates More Uncertainty for Mortgage Servicers

For mortgage servicers, all guidance from the CFPB is certainly welcomed and couldn’t come soon enough. With the effective date quickly approaching, many — perhaps most — in the industry are still struggling with how to operationalize many of the debt validation requirements, including the concept of choosing an itemization date in certain scenarios and the required content that flows from the itemization date. Even though the CFPB included a special rule for certain residential mortgage debts that allows a servicer to not display much of the itemization information when it includes a copy of the most recent periodic billing statement with the debt validation notice, there still are challenges that many servicers are struggling to overcome. In that regard, the CFPB’s guidance does clear up some questions and theoretically makes a couple of things much easier. However, unfortunately the guidance also raises even more questions and, quite frankly, puts servicers in a bit of a tough spot with little time to react.