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Compliance Alliance Question of the Week

1/30/2019

 
Question:
Our bank is acquiring another bank, and once the acquisition is complete, we are going to change our name to the acquired’s name.  The only thing changing from a servicing perspective is the name and address of the bank. Based on this information, are we still required to send out a Notice of Servicing Transfer?  Also, should the other institution be sending out a Notice of Servicing Transfer  as well?
 
Answer:
Yes, the notice would generally be required of both the transferee and transferor servicer as set out here:
 
(i) In general. Except as provided in paragraphs (b)(3)(ii) and (iii) of this section, the transferor servicer shall provide the notice of transfer to the borrower not less than 15 days before the effective date of the transfer of the servicing of the mortgage loan. The transferee servicer shall provide the notice of transfer to the borrower not more than 15 days after the effective date of the transfer. The transferor and transferee servicers may provide a single notice, in which case the notice shall be provided not less than 15 days before the effective date of the transfer of the servicing of the mortgage loan.
https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/33/#b-3-i
 
Although a single notice on behalf of both could be provided, it is best practice and would be required of your institution anyway since it is the one acquiring and changing names. It also would not be exempt, unfortunately, since the payee name and address are changing:
 
(2) Certain transfers excluded.
(i) The following transfers are not assignments, sales, or transfers of mortgage loan servicing for purposes of this section if there is no change in the payee, address to which payment must be delivered, account number, or amount of payment due:
(A) A transfer between affiliates;
(B) A transfer that results from mergers or acquisitions of servicers or subservicers;
(C) A transfer that occurs between master servicers without changing the subservicer;
https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/33/#b-2-i

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