Because there are fundamental differences between reverse mortgages and most other debt obligations, NRMLA would like to see them (and non-recourse debt obligations, generally) exempted from the Fair Debt Collection Practices Act, according to comments submitted this week to the Consumer Financial Protection Bureau.
The FDCPA – which Congress passed in 1977 to eliminate abusive, deceptive and unfair debt collection practices – is being updated by the CFPB to conform to modern-day communications and technologies. While NRMLA applauds these efforts, “some of the proposals embodied in the proposed rulemaking, without appropriate revisions, will discourage constructive communications between reverse mortgage servicers and borrowers in the context of non-collection related servicing matters and loss mitigation.”
In its proposed rule, the Bureau identified “excess call frequency” as an unfair and abusive practice. Debt collectors would be prohibited from calling a consumer more than seven times over a seven-day period, and after a telephone conversation has occurred from contacting that same person again within seven days, under the CFPB’s proposal.
NRMLA cited instances where a reverse mortgage servicer may need to contact a borrower or borrower’s heirs more frequently than allowed under the CFPB’s proposed rule, whether it’s to schedule an appraisal prior to calling a HECM due and payable, communicating loss mitigation or foreclosure alternatives, or assisting the borrower after a natural disaster.
“The unintended consequence of the Bureau’s proposal may be that servicers and creditors would limit their efforts to communicate loss mitigation or foreclosure alternatives, leading to more frequent, and potentially unnecessary, foreclosures,” said NRMLA.
Members can read NRMLA’s comments in their entirety by logging into the Comment Letters section of NRMLAonline.org.