What To Do About Successors In Interest And A-Rod

August 8, 2016 at 9:36 am 1 comment

Your faithful blogger goes away for a couple of days to have a great time in Cape Cod and all Hell breaks loose: Two overpaid underperforming relics of the Yankees announce they will “retire” and the CFPB promulgates yet more regulations.

I exaggerate slightly, but the CFPB did release final regulations late last week that will require the adoption of new procedures when dealing with successors in interest.  The regulations also provide some  guidance on disclosure requirements and bankruptcy.

Generally speaking a successor in interest is someone who obtains the right to real property automatically through the operation of law.  For example, your mom and dad might provide in their will  that their son gets the family home when they die.  But just because someone is a successor in interest doesn’t mean they will necessary assume responsibility for the property.  For example, let’s say mom and dad died with a mortgage on the property which comes with hefty property taxes.  Consequently, a successor in interest isn’t responsible for the mortgage unless he legally assumes responsibility for the home.

Lenders have been understandably reluctant to treat a successor in interest the same as they did the deceased owner. As a result consumer groups have complained that heirs haven’t received adequate information about loss mitigation options.

The new regulations address this problem. Lenders are responsible for clarifying how a person can identify themselves as successors and to provide them with the same notices the previous owners were receiving  As explained in the preamble   “the Bureau believes that successors in interest will benefit from other protections of the Mortgage Servicing Rules even if they do not occupy or intend to occupy the property, just as non-occupant borrowers currently do. For example, successors in interest, whether occupants or non-occupants, often encounter difficulties accessing information about the mortgage account and making payments and will benefit from the ability to submit requests for information and request payoff statements once they are confirmed.”

This is important stuff. It means more procedures and more trip wires for lenders even with a partial exemption for smaller mortgage servicers.

This is just one example in a wide-ranging regulation that your compliance person or people should be delving into. It also further complicates the interplay between New York and federal law, something I will be talking about as the week goes on.

By the way, the volume and complexity of mortgage regulations-remember the CFPB released additional mortgage proposals last week-underscores that  it is becoming impossible for all but the largest institutions to be cognizant of and implement new regulations.  This is what I do for a living.  Where Is the person for whom compliance is just one of several responsibilities supposed to find the time to understand implement another round   nuanced requirements packages in   nine hundred pages of nuanced explanations?

Perhaps   Mark Teixeira, who graciously announced that he would be retiring at the end of the season when his eight year, $180 million contract comes to an end,  even though the Yankees had no intention of resigning him or  Álex Rodríguez   who is “retiring” on Friday to spare himself the embarrassment of being release by the Yankees,  who still owe him another $25 million on his guaranteed contract  are looking for something to do with their free time.

 

 

Entry filed under: Regulatory. Tags: , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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