The Consumer Financial Protection Bureau enforces rules for mortgage settlement and servicing.

Mortgage loan servicing and Regulation X, the Real Estate Settlement Procedures Act

Real estate purchase and sale transactions are significant financial events for consumers. The paperwork and disclosures involved in real estate buying and selling is complex. The state and federal consumer protection laws are designed to protect real estate consumers. The Real Estate Settlement Procedures Act (RESPA), established by Congress on December 22, 1975, is the federal law regulates the real estate settlement service process. The U.S. Consumer Financial and Protection Bureau (CFPB) enforces RESPA and its rules for mortgage settlement and servicing. Regulation X is the body of law that implements RESPA. In 2014, a final rule amending Regulation X lists mortgage servicing rules and regulations to make the loan settlement and servicing process fair and transparent for consumers.

January 2014, final rule modifications to Regulation X for mortgage servicer regulations.

Final rule changes to Regulation X, amended by the CFPB, January 17, 2013, and effective January 10, 2014, provide substantive and technical rules and procedures to improve the process of loan settlement and servicing. “Changes included modifying the servicing transfer notice requirements and implementing new procedures and notice requirements related to borrowers’ error resolution requests and information requests. The amendments also included new provisions related to escrow payments, force-placed insurance, general servicing policies, procedures, and requirements, early intervention, continuity of contact, and loss mitigation.[i]” The ineffective and inefficient policies and procedures in home loan modifications needed updating to protect consumers.

The January 2014 Regulation X final rule changes implement Dodd-Frank Act sections stating mortgage loan servicer obligations with respect to “periodic mortgage statements, disclosures for ARMs, prompt crediting of mortgage loan payments, requests for mortgage loan payoff statements, error resolution, information requests, and protections relating to force-placed insurance.[ii]

The final rule amendment also requires mortgage loan servicers to establish policies and procedures to provide borrowers with loss mitigation options for delinquent loans, notably procedures “providing delinquent borrowers with continuity of contact with servicer personnel capable of performing certain functions.[iii]

Modifying and streamlining the servicing related provision of Regulation X, the final rule revises professions relating to mortgage servicers obligations to provide disclosures to borrowers and the management of escrow accounts.

These policies and procedures should make the loan modification process more efficient and effective. Despite the new changes, some lenders and banks fail to update their practices to meet the new standards, or they make serious mistakes and violate the law, for which there are available consumer remedies.

Knowing what to expect under new federal rules and how to spot a RESPA, Regulation X violation

Consumers have the right to a prompt and clear exchange of information and a responsive relationship with mortgage servicers with Regulation X as amended. The CFPB publishes a mortgage consumer summary of the rules for mortgage servicers. Regulation X provides remedies for consumers, for violations of many of the communication, information, error, disclosure and documentation requirements of mortgage servicers.

If your mortgage loan servicer fails to provide or transfer information, or they fail to timely work to update accurate information, there could be a Regulation X violation. Likewise, if there are changes to an adjustable mortgage rate, your servicer must notify you within a specific amount of time. If you have problems paying your mortgage loan, there are procedures in the law to help you at no cost. At any point in the process of obtaining or servicing a mortgage loan, there can be a failure to follow the law. Consumer protection attorneys can review the facts in your situation and tell you whether your mortgage loan servicer is violating RESPA rules, Regulation X and otherwise.[iv]

The Zamparo Law Group, P.C. is a consumer protection law and litigation firm that files lawsuits against violators of federal and state consumer protection laws. Learning how to spot consumer rights violations is important so that informed consumers can stand up to those who violate the law.

To learn more about consumer protection law and the Zamparo Law Group, please visit the firm’s website. You may also ask for a free case review. The Zamparo Law Group is connected on social media, please follow us and share our resources we share on our Facebook page. You may call the Zamparo Law Group with any questions by dialing (224) 875-3202.


[i] Federal Reserve Bank, Regulation X, Real Estate Settlement Procedures Act

[ii] Consumer Financial Protection Bureau, Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X)

[iii] Consumer Financial Protection Bureau, 2013 Real Estate Settlement Procedures Act (Regulation X) and Truth in Lending Act (Regulation Z) Mortgage Servicing Final Rules.

[iv] Consumer Financial Protection Bureau, Have a mortgage? What you can expect.

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