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62 is critical that servicers understand and comply with all facets of the CFPB to not only protect borrowers but to also protect themselves and investors from unscrupulous individuals. To put it bluntly, "CFPB is a necessary evil." Kobin, sums it up nicely: "Designing default activities around the customer vs. existing operating practices provides a good shot at meeting CFPB requirements and is certainly a precursor to delivering 'best-in-class' default servicing." Excellence in default management entails a defined set of processes and protocols undertaken by servicers to: (i) collect debt, (ii) offer assistance to those individuals having difficulty meeting their mortgage obligations through a series of counseling and loss mitigation options, and (iii) provide borrowers with better disclosure about their mortgage obligations. e CFPB has put forward a set of guidelines and standards for servicers to follow that are designed to increase borrower transparency, to preserve the mortgagor's ability to pay, and to prevent borrowers from receiving unwelcome surprises. ese guidelines and requirements are designed to consolidate and standardize the many protocols and requirements existing in the industry today that govern residential mortgage loan servicing. Preservation of homeownership is a critical goal of the CFPB and is consistent with the goals of other federal, state, and local regulatory agencies and governing bodies. Relative to specific default administration processes (i.e., collections, loss mitigation, foreclosure processing, and adjustable rate mortgage [ARM] processing changes) where individual state or local requirements may be more rigid than those put forth by the CFPB, the underlying state/local requirements will apply. COLLECTIONS e CFPB clearly outlines that collection activities must be performed by servicers in accordance with the Fair Debt Collection Practices Act (FDCPA) and other specific guidelines that may be dictated by federal, state, and local statutes. Relating to mortgage loan collections, the Federal Trade Commission (FTC) provides borrowers with an outlet to register complaints associated with inappropriate debt collection practices that may be followed by mortgage loan servicers. Specifically, the FDCPA is designed to: (i) restrict how and when collectors can contact consumers and (ii) establish clear parameters regarding harassment and place restrictions on the use of deceptive, false, and misleading practices. Under the FDCPA, a "debt collector" is defined as someone who regularly collects debts owed to others. In accordance with guidelines and requirements summarized by the FDCPA, servicers must adhere to a number of very specific guidelines relating to borrower contact, borrower harassment, and the non-use of deceptive, false, and misleading practices. As these compliance requirements serve as the cornerstone for an effective default management function, they are absolutely critical for servicers to follow in order to avoid sanctions, risk loss of licenses, encounter compliance citations, risk potential downgrades from the rating agencies, and receive associated bad press. Specific FDCPA compliance requirements relate to: Borrower Contact: With respect to borrower contact, collection calls cannot be made prior to 8:00 a.m. and after 9:00 p.m. In addition, borrowers cannot be called if they are represented by an attorney, and all contact must stop if the servicer receives, in writing, a notice from the borrower to cease communication. Two exceptions are: (i) instances where borrowers may be contacted by the servicer to advise that debt collection efforts are being terminated and (ii) instances where specified debt collection remedies are invoked or are intended to be invoked at a future date. Deceptive, False and Misleading Practices: Misrepresentation by servicers of the borrower's character, dollar amount owed, or status of the debt is prohibited. Also prohibited are misrepresentations made by servicers implying to borrowers that a collection call is being made by an attorney. Additionally, servicers are prohibited from making statements or making implications to borrowers that non-payment of debt will result in arrest, imprisonment, pay garnishment, or seizure of property (unless such actions are lawful and the collector or creditor intends to take such actions), and servicers cannot use false and fictitious names in the collections process. In addition to the above, the FDCPA has restrictions designed to prevent unfair practices, including: (i) the collection of funds in excess of what is expressly authorized by the underlying note or mortgage loan agreement, (ii) solicitation of post-dated checks in order to threaten or institute criminal prosecution, (iii) depositing or threatening to deposit post-dated checks or other pay instruments prior to the date on the payment instrument, (iv) charging for communication or concealing the purpose of a communication, including collect calls and telegram fees, (v) taking or threatening to take property that cannot legally be confiscated or for which the debt collector does not intend to acquire, and (vi) communicating information relating to the debt through insecure means, such as a postcard. CFPB guidelines and standards, together with applicable federal, state, and local statutes, should be overlaid on top of the FDCPA parameters previously outlined herein. e CFPB specifically states that servicers are required to engage in early intervention with delinquent borrowers. Good faith efforts to establish live borrower contact (i.e., telephone conversations or in-person meetings) must commence no later than the 36th day of delinquency. Early Intervention: CFPB early intervention standards do not specifically define what constitutes a "good faith effort" to contact the borrower. In the absence of clarification from the CFPB, servicers should determine what they believe reasonably constitutes a good faith effort, including specifying the minimum number of days the servicer must attempt to contact the borrower and the minimum number of telephone calls the servicer must make during different timeframes to the last known telephone number or to the numbers on record. All of this must be done while maintaining compliance with the FDCPA. In an attempt to make contact with the Today's borrowers are much more aware of regulatory requirements of servicers.

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