November 25, 2014

by Matthew B. Theunick
Trott & Trott, P.C. – USFN Member (Michigan)

Pursuant to the CFPB’s final rule modifications to Regulation X, which implements the Real Estate Settlement Procedures Act of 1974, “To the extent that a borrower requests a servicing file, the servicer shall provide the borrower with a copy of the information contained in the file subject to the limitations set forth in § 1024.36(f).” See, 12 CFR Part 1024, Docket No. CFPB-2012-0034, p. 216.

Section 1024.36 of the CFR deals with borrower requests for information, and § 1024.36(f) sets forth the specific circumstances where a servicer is not required to comply with a borrower’s request, after the servicer “reasonably determines” that any of the following apply:

• Duplicative information: The information requested is substantially the same as information previously requested by the borrower, for which the servicer has previously complied with its obligation to respond.

• Confidential, proprietary, or privileged information: The information requested is confidential, proprietary, or privileged.

• Irrelevant information: The information requested is not directly related to the borrower’s mortgage loan account.

• Overbroad or unduly burdensome information requested: The information request is overbroad or unduly burdensome. An information request is overbroad if a borrower requests that the servicer provide an unreasonable volume of documents or information to a borrower. An information request is unduly burdensome if a diligent servicer could not respond to the information request without either: exceeding the maximum time limit permitted for responding to a qualified written request [i.e., 30 days, excluding legal public holidays, Saturdays, and Sundays, pursuant to § 1024.36(d)(2)(1)(B), which may be further extended by an additional 15 days]; or incurring costs (or dedicating resources) that would be unreasonable in light of the circumstances. To the extent that a servicer can reasonably identify a valid information request within a submission that is otherwise overbroad or unduly burdensome, the servicer shall comply with the obligations of § 1024.36(c) and (d) to timely acknowledge and respond to the request.

As such, while the CFPB’s modifications to Regulation X broadly allow for borrower requests for loan servicing files, loan servicers are allowed useful carve-outs to either: refrain from providing information that is duplicative, irrelevant, or overbroad/unduly burdensome; or to redact confidential, proprietary, or privileged information. Thus, care should be taken when reviewing, responding to, and turning over loan servicing files to borrowers.

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