Can My Mortgage Lender Refuse to Send Monthly Statements After Bankruptcy?

Question

I filed a Chapter 7 bankruptcy last year. I have a mortgage on my house, but I didn't reaffirm the loan during the bankruptcy. Instead, I simply continued making my monthly payments. However, my lender has stopped sending me the monthly mortgage statements. Can it do this? How can I get it to start sending the statements again?

Answer

Unfortunately, it's pretty well established that mortgage servicers don't have to provide monthly mortgage statements (or at least they think they don't) after a bankruptcy. One reason for this is due to an exemption from the periodic statement rule. (This is explained in more detail below.) However, there are some steps you can take to try to get the servicer to resume sending statements. Read on to learn more.

The Periodic Statement Rule

During the mortgage crisis, homeowners didn't always receive clear and current information about the status of their mortgage accounts. As a result, the Consumer Financial Protection Bureau (CFPB) issued a rule that a mortgage creditor or servicer (the company you make your payments to) must send periodic billing statements to the borrower. This is called the periodic statement rule, and it went into effect January 10, 2014. (Learn more in Nolo's article New Federal Rules Protecting Homeowners With Mortgages.)

Under this rule, mortgage creditors and servicers must send you a monthly statement that provides useful information about the amounts you have paid, as well as the amounts you owe, and other information. (Learn more in Nolo's article The Periodic Statement Rule: Monthly Mortgage Statement Requirements.)

Exceptions to the Rule

There are a few exceptions to the rule. For example, if you have a fixed-rate loan and your servicer already provided a payment coupon book, it does not have to send monthly statements. The servicer is also exempt from sending statements during bankruptcy.

In addition, based on the official interpretation of the periodic statement rule, it appears that the creditor or servicer does not have to send the monthly statement if the debt is discharged through bankruptcy.

Debate Surrounding Obligation to Resume Sending Periodic Statements After Bankruptcy

There is some debate about whether the creditor or servicer must resume sending statements pursuant to the periodic statement rule after the bankruptcy.

Even though the official interpretation says the creditor or servicer doesn't have to send periodic statements if the mortgage debt is discharged, some bankruptcy attorneys believe that they must send the statements unless the mortgage lien is extinguished too. When the mortgage lien still exists (and the creditor feels it is entitled to enforce the lien), then it follows that they must send statement. (Learn more in Nolo's blog Can a Lender Take Your Mortgage Statements Hostage to Force You to Reaffirm?)

How to Get the Servicer to Resume Sending Statements

The first thing you should do is contact your mortgage servicer and request that it start sending the statements again. This probably won't do the trick, but it doesn't hurt to ask. The servicer may tell you that in order for it to resume sending statements, you must reopen the bankruptcy case and reaffirm the loan, but this is generally a bad idea. (Learn more in Nolo's article Reaffirming Secured Debt in Chapter 7 Bankruptcy.) Plus, in many jurisdictions, the court won't approve such a reaffirmation.

You can also try sending send a letter to your mortgage servicer referring to the periodic statement rule and requesting that it start sending monthly mortgage statements.

What You Can Do to Keep Tabs on Your Account if the Servicer Refuses to Send Statements

If the servicer still refuses to send monthly statements and you want to get information about your account (such as the payment amount or when the interest rate is scheduled to adjust, for example), you can make a request for information under the Real Estate Settlement Procedures Act (RESPA) (12 CFR § 1024.36). (The regulation states that you must make the request within one year of the discharge, but this has been interpreted to mean when both the debt and the corresponding lien have been extinguished.)

The request must be in writing and include:

• your name
• information that enables the servicer to identify your mortgage loan account, and
• the information that you are requesting with respect to your mortgage loan.

Additionally, you should always date and sign the letter. Be sure to send the letter via certified mail to the servicer's designated address so that there is a record of when the servicer receives the request. (To find the designated address for such requests, check the servicer's website. The servicer is required to post the designated address on its website if the site lists any contact address information.)

The servicer must acknowledge your request within five days and respond within 30 days. The servicer generally must provide a written acknowledgment to you within five days (excluding legal public holidays, Saturdays, and Sundays) after receiving your request for information.

Then, it must generally respond to your information request in writing within 30 days (excluding legal public holidays, Saturdays, and Sundays) after receiving the request. The servicer may extend this period by an additional 15 days (not including legal public holidays, Saturdays, and Sundays) if, prior to the expiration of the original 30-day period, it notifies you in writing of the extension and the reasons for it.

Ongoing Discussions About Periodic Statements and Bankruptcy

There has been a lot of discussion about periodic statements and bankruptcy recently. Most of the discussion has focused on whether the creditor or servicer must send periodic statements during bankruptcy (but not necessarily whether it must resume sending statements after bankruptcy) since it could be viewed as violating the automatic stay. The CFPB has stated that it will continue to examine this issue and may reinstate a periodic statement requirement with respect to consumers in bankruptcy.

As far as what will happen for borrowers after bankruptcy that want to receive periodic statements, the CFPB may revisit this issue as well. The rule is very new and it's difficult to say what might happen in the future.

For now, your servicer can send monthly statements, if it chooses to do so.