QUESTION
We are a bank that has its headquarters in New York. We really like
your newsletter. Our servicing department asked about how to handle the Servicing
Disclosure Statement if there are conflicts with state law. So, are there state
laws that actually conflict with the Servicing Disclosure Statement rules preempted?
ANSWER
Thank you for reading our newsletter! We’re glad you find it helpful
and informative.
With respect to a mortgage servicing loan, a lender or servicer is
considered to have compliance with provisions of any state law or regulation
required notice to a borrower at the time of application for a loan if the
lender or servicer complies with the Servicing Disclosure Statement
requirements.
Any state law requiring notice to the borrower at the time of application
regarding the potential for servicing transfer is preempted, and there may be
no additional borrower disclosure requirements regarding the potential for a
servicing transfer under state law.
But, keep this in mind, provisions of state law
requiring additional notices to insurance companies or taxing authorities are
not preempted, and the additional information may be added to a Servicing
Disclosure Statement if the procedure is allowable under state law. [24 CFR § 3500.21(h)]
Jonathan Foxx
Managing Director
Lenders Compliance Group
