In response to the mortgage crisis in the mid to late 2000s, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. This federal law imposed new obligations on mortgage creditors and loan servicers. It also gave the Consumer Financial Protection Bureau (CFPB) the ability to both implement new requirements, as well as adopt new rules.
One of these rules—the "periodic statement rule"—requires mortgage lenders and servicers to provide homeowners with prompt, regular, and accurate information about their mortgage loans. Under this federal law, which went into effect on January 10, 2014, servicers must send monthly statements, subject to a few exceptions, containing detailed information about your payment, delinquency, and who to contact for questions.
Among other things, the periodic statement rule says that the mortgage creditor or servicer must send periodic billing statements to the borrower. Under this rule, your mortgage creditor or servicer must provide you with a mortgage statement each billing cycle, usually monthly, that meets certain timing and content requirements.
The periodic statement must be delivered or placed in the mail within a reasonably prompt time after the payment due date or the end of any courtesy period provided for the previous billing cycle. (12 C.F.R. § 1026.41). Generally, delivering, emailing, or placing the periodic statement in the mail within four days of the close of the courtesy period of the previous billing cycle is considered reasonably prompt.
Some types of loans are exempt from the requirements of the periodic statement rule, including:
The periodic statement rule requires that all of the following information be included in the billing statement.
The statement must show how much you owe, the payment due date, and the amount of the late fee if you submit payment after the courtesy period expires.
A breakdown of how much money per payment will be applied to principal, interest, and escrow, as well as the total of any fees imposed since the last statement and any past-due amounts, must also be contained in the statement. This information will help you keep track of how your payments are distributed among the different categories. Also, be on the lookout to make sure the servicer doesn't make an error, such as charging improper fees.
The statement must include a list of all transaction activity and a breakdown of payments you made since the last statement and since the beginning of the calendar year. It must also show how those payments were applied to principal, interest, escrow, fees, and suspense. The statement must include the date of the transaction, a brief description of the transaction, and the amount of the transaction.
The statement will also show you what happened to any partial payments (payments that were less than the total amount owed) you sent in.
Partial payments are often placed into a suspense account, which is used to temporarily hold funds until they're allocated. The nature of this type of account, what it is used for, and when it is used has often been confusing for borrowers. Now, statements must clearly indicate which funds were placed into suspense (if any) and explain what must be done for the funds to be applied to your account.
The statement must provide you with:
The purpose of this requirement is to ensure that you have access to someone who can answer questions about your account and so that any qualified written request is received and addressed by a specially-trained employee.
In addition, the billing statement must provide you with specific information relating to your account, including:
This requirement is designed to provide borrowers with improved information about their loan so they're not caught off guard when an interest rate adjusts, for example.
If you're 45 days or more behind in payments, the statement must provide particular information related to the delinquency, including:
If you're behind in payments, this information will give you a good idea of what you need to do to get caught up. It will also assist you in making sure that the servicer doesn't make an error, like starting a foreclosure in violation of the law. For example, the servicer may not dual track your loan.
Ultimately, the periodic statement rule is designed to ensure that you receive prompt, regular, and accurate information about your mortgage loan. To learn more about this rule and the other mortgage servicing rules, go to the Consumer Financial Protection Bureau's website or talk to a foreclosure lawyer.