Cfpb II: B; Mortgage Servicing Pg 1 - 31

The statement is false because it is important for a servicer to examine whether their loss mitigation program results in adverse impact on the basis of a protected class. This is because it is illegal to discriminate against individuals based on protected characteristics such as race, gender, or religion. If a servicer's loss mitigation program disproportionately harms individuals from a particular protected class, it could be considered discriminatory and a violation of fair housing laws. Therefore, it is crucial for servicers to ensure that their programs do not result in adverse impact on protected classes.

The correct answer is clear, prominent and readily understandable. This means that the information provided to consumers about loss mitigation alternatives should be easily comprehensible and noticeable. It should be presented in a way that is clear and easy to understand, ensuring that consumers are able to make informed decisions about their options.

The statement is true because it states that the servicer discloses all fees associated with modifications in a timely, prominent, and understandable manner. This means that the servicer provides clear and easily accessible information about any fees that may be involved in the modification process. By doing so, borrowers can make informed decisions and understand the financial implications of the modifications.

The statement "Evaluate the servicer's training programs for employees involved in the loan modification process" is true. This means that the training programs for employees who handle loan modifications should be assessed or reviewed. This evaluation helps ensure that the training provided is effective and sufficient for employees to properly handle the loan modification process. By evaluating the training programs, any weaknesses or areas for improvement can be identified and addressed, leading to better performance and outcomes in loan modifications.

The correct answer is True. This means that the servicer does disclose any material negative consequences that may occur as a result of a completed loan modification. This is important for borrowers to be fully informed about the potential impacts of modifying their loan, such as a decreased credit score, income tax implications, and any increase in monthly payment amount. By disclosing these consequences, borrowers can make an informed decision about whether to proceed with the loan modification.

The explanation for the correct answer is that it is important for the servicer to disclose any rescheduling of payments in a clear, prominent, and understandable manner. This ensures transparency and allows the borrower to be fully aware of any changes to their payment schedule. By disclosing this information clearly and prominently, the servicer is providing the borrower with the necessary information to make informed decisions about their financial obligations.

A servicer can indeed service loans on behalf of itself or an affiliate. This means that a company or entity can handle the administrative tasks and responsibilities related to loan servicing, such as collecting payments, managing escrow accounts, and handling customer inquiries, either for its own loans or for loans belonging to a related company or entity. This arrangement allows for centralized loan servicing operations and can provide efficiency and cost savings for the entities involved.

The Fair Credit Reporting Act (FCRA) mandates that servicers who provide information to consumer reporting agencies must guarantee the correctness of the data included in the consumer reporting system. This means that these servicers are obligated to ensure that the information they provide is accurate and reliable. Therefore, the statement "True" is correct, as it accurately reflects the requirement imposed by the FCRA.

The given statement is true. According to the Fair Debt Collection Practices Act (FDCPA), a "debt collector" is defined as any person who regularly collects or attempts to collect consumer debts for another person or institution, or uses a different name when collecting its own consumer debts. This definition includes individuals or companies who engage in debt collection activities on a regular basis.

The correct answer is true because if a servicer is offering short sales as a loss mitigation tool, it is important for them to provide clear and timely disclosures to the customer about the process. This helps ensure transparency and allows the customer to make informed decisions regarding their options.

The given statement suggests that the servicer always credits payments towards principal and interest before applying them to fees and other charges. This means that whenever a payment is made, the servicer will first allocate the amount towards reducing the outstanding principal balance and paying off the interest accrued on the loan. Only after these obligations are met, any remaining amount will be used to cover fees and other charges associated with the loan. Therefore, the correct answer is "All the time".

The correct answer is GLBA. The Gramm-Leach-Bliley Act (GLBA) requires servicers within its scope of coverage to provide privacy notices and limit information sharing. This act was enacted in 1999 and aims to protect the privacy of consumers' personal financial information held by financial institutions. It requires financial institutions to inform their customers about their information-sharing practices and give them the opportunity to opt-out of sharing their information with third parties. The GLBA also imposes certain safeguards to ensure the security and confidentiality of customers' nonpublic personal information.

The GFE (Good Faith Estimate) is not a law, but rather a document that lenders are required to provide to borrowers under the Real Estate Settlement Procedures Act (RESPA). The GFE provides an estimate of the costs associated with obtaining a mortgage loan. While servicers must comply with RESPA, TILA, EFTA, HPA, and FCRA, the GFE is not a law that they need to comply with.

The explanation for the given correct answer is that the auditor does not need to see if there was a cost incurred to the government in order to complete a disparate impact analysis of a servicer's loss mitigation program. The analysis focuses on whether a facially neutral policy or practice has an adverse effect on a protected class and if there is a legitimate business need that cannot be achieved through a less discriminatory alternative. The cost incurred to the government is not a factor in this analysis.

The explanation for this answer is that the question asks for the "least correct" statement, meaning that all of the other statements are correct. The other statements evaluate different aspects of the servicer's practices in providing accurate information, adequate methods for contact, documentation of contacts, and efficient paperwork collection and tracking. However, the statement about providing timely notice of rejection and the rationale is not directly related to the servicer's practices in providing accurate information throughout the process.

The explanation for the given correct answer, which is False, is that the Fair Debt Collection Practices Act (FDCPA) does not specifically govern foreclosure activities. The FDCPA primarily regulates the activities of third-party collection agencies and does not directly apply to servicer collection activities, even if the loan was acquired in default. Foreclosure activities are typically governed by state laws and regulations.

The correct answer is False. This means that the statement "Determine whether the servicer has foreclosed on any customers paying on a trial modification agreement, permanent modification agreement, forbearance agreement, or other similar agreement as allowed by CFPB" is not true. In other words, the servicer has not foreclosed on any customers who were paying on these types of agreements.