Black Knight Delivers Informative White Paper and MSP® Servicing System Enhancements to Help Clients Prepare
New debt collection regulations are on the horizon that will impact collection practices for Black Knight’s servicing clients that qualify as “debt collectors” under the new Consumer Financial Protection Bureau (CFPB) rules. The CFPB recently proposed amendments to Reg F (12 CFR §1006), which implements the Fair Debt Collection Practices Act (FDCPA) originally established in 1977 by Congress. The FDCPA establishes specific consumer protections to regulate communications between debt collectors and consumers. Harassment or abuse, false or misleading representations, and unfair practices are prohibited.
On Nov. 30, 2021, two new rules will go into effect: the November 2020 Debt Collection Rule and the January 2021 Debt Collection Rule. Black Knight is currently working with MSP® loan servicing system clients to leverage both existing functionality and new enhancements to prepare for the new FDCPA Rules.
About the FDCPA Rules
The November 2020 Debt Collection Rule
This rule addresses how, when and where debt collectors can communicate with consumers about the collection of their debts.
- This rule gives consumers the ability to control HOW the debt collector communicates with them and what forms of media they can and cannot use for communication.
- The November Rule further addresses WHEN the debt collector can communicate with consumers. It prohibits a debt collector from communicating with a consumer in the collection of any debt at any “unusual time,” or a time that “the debt collector knows is inconvenient for the consumer.”
- The rule also prohibits debt collectors from placing phone calls repeatedly with an intent to annoy, abuse or harass. It limits calls per account to seven calls placed in seven consecutive calendar days.
- The November Rule continues by addressing WHERE the debt collector can communicate with the consumer. The rule prohibits the debt collector from communicating or attempting to communicate with a consumer at any “unusual place,” or at a place that “the debt collector knows or should know is inconvenient.”
- Finally, the November Rules states that if a consumer notifies a debt collector in writing that they refuse to pay a debt or the consumer requests that the debt collector cease further communication, the debt collector must stop further communication with the consumer, barring certain exceptions.
The January 2021 Debt Collection Rule
The January 2021 Debt Collection Rule requires debt collectors to provide consumers with oral or written validation information about the debt and an explanation of the consumer’s rights. It also identifies actions that must be taken before a debt collector may report information to the credit reporting agencies and provides a prohibition on suits regarding time-barred debt.
- During the validation period, this rule requires that a debt collector must not engage in any collection activities or communications that overshadow or are inconsistent with the disclosure of the consumer’s rights to dispute the debt and to request the name and address of the original creditor.
- For the first time, the January Rule addresses “passive collection” to include credit reporting. Before a debt collector can furnish information to a consumer reporting agency, it must speak to the consumer about the debt in person or by phone OR mail or electronically deliver a letter to the consumer.
- Finally, the January Rule states that debt collectors must retain records that are evidence of compliance or noncompliance with the FDCPA Rules. These records must start on the date that the debt collector begins collection activity on a debt until three years after the debt collector’s last collection activity on the debt. Servicers that record collections calls must retain the recordings for three years after the date of the call.
How Can Mortgage Servicers Prepare?
Black Knight is working with its MSP loan servicing system clients and enhancing the platform to support the new FDCPA Rules. We have also developed an informative white paper with detailed steps to guide servicers through preparatory efforts. We encourage our servicing clients to review their debt collection processes and systems to make the necessary updates to support FDCPA compliance. The CFPB has stated that being “unprepared is unacceptable,” so it is important to be ready when the new rules are established to avoid financial penalties and negative publicity due to non-compliance.
If you require assistance preparing for the new FDCPA Rules, contact Black Knight.