Consumer Financial Protection Bureau Acting Director David Uejio has said that
Both final rules are scheduled to take effect on Nov. 30, 2021 according to the CFPB’s annual report to congress on the FDCPA.
The new FDCPA rules could help third-party mortgage servicing entities use new safe harbors for compliance, according to some industry attorneys.
The FDCPA generally applies to third-party distressed debt collectors to whom debts have been transferred at the default stage.
The rules lay out several new regulations, such as setting call frequency guidelines to help companies ensure their communications don’t constitute harassment, as well as providing a model form for debt validation letters used to communicate amounts owed. It also sets new compliance guidelines for email and voicemail. Specifically, borrowers can be contacted seven times within seven days. After speaking with a consumer, they cannot be contacted for another seven days.
Mortgage servicing companies have had to establish that borrowers’ emails or voicemail have been kept private before using those methods to communicate about debt, but under the new rules going into effect later this year, there are specific protocols that establish compliance.
“This is the first time we’ve gotten clarification on how debt collection rules apply to more modern technology,” said David Tallman, a partner at Mayer Brown, of the rules finalized late last year. “They provide some guidelines for how to comply with statutory requirements.”
The rules have generally been considered a net positive from the industry’s perspective. Overall, they make jurisdictional differences clearer and clarify compliance that can otherwise be complicated by varying interpretations by the courts and jurisdictional differences clearer.
“Everybody’s been relying on interpretations from the federal courts, which differ,” said Kara Snow, senior regulatory counsel at Covius, a provider of compliance services to the mortgage industry.
The clarifications regarding email and voicemail will likely be particularly helpful if they move forward. There were several different court interpretations related to voicemail use in particular.
“Any time you communicate with a borrower when you collect a debt, you have to tell them you’re a collector, but if you tell them you’re one and someone else hears or sees then you could be in violation by communicating with a third party. It was a catch-22,” she said. “Most people simply haven’t been using email as a result, but this provides a way to use it compliantly.”
The model validation of debt form also will be helpful because there has been a lot of litigation in this area that this form could help prevent, she said.
