CornellLawSchool

CFRTitle12ChapterXPart1024SubpartCSection1024.35

12CFR1024.35Errorresolutionprocedures.
1024.35Errorresolutionprocedures.
Linktoanamendmentpublishedat81FR72371,Oct.19,2016.

(a) Noticeoferror.Aservicershallcomplywiththerequirementsofthissectionforanywrittennoticefromtheborrowerthatassertsanerror
andthatincludesthenameoftheborrower,informationthatenablestheservicertoidentifytheborrower'smortgageloanaccount,andthe
errortheborrowerbelieveshasoccurred.Anoticeonapaymentcouponorotherpaymentformsuppliedbytheservicerneednotbetreated
bytheservicerasanoticeoferror.Aqualifiedwrittenrequestthatassertsanerrorrelatingtotheservicingofamortgageloanisanoticeof
errorforpurposesofthissection,andaservicermustcomplywithallrequirementsapplicabletoanoticeoferrorwithrespecttosuchqualified
writtenrequest.
(b) Scopeoferrorresolution.Forpurposesofthissection,thetermerrorreferstothefollowingcategoriesofcoverederrors:

(1)Failuretoacceptapaymentthatconformstotheservicer'swrittenrequirementsfortheborrowertofollowinmakingpayments.
(2)Failuretoapplyanacceptedpaymenttoprincipal,interest,escrow,orotherchargesunderthetermsofthemortgageloanand
applicablelaw.
(3)Failuretocreditapaymenttoaborrower'smortgageloanaccountasofthedateofreceiptinviolationof12CFR1026.36(c)(1).

(4)Failuretopaytaxes,insurancepremiums,orothercharges,includingchargesthattheborrowerandservicerhavevoluntarilyagreed
thattheservicershouldcollectandpay,inatimelymannerasrequiredby1024.34(a),ortorefundanescrowaccountbalanceasrequired
by1024.34(b).
(5)Impositionofafeeorchargethattheservicerlacksareasonablebasistoimposeupontheborrower.

(6)Failuretoprovideanaccuratepayoffbalanceamountuponaborrower'srequestinviolationofsection12CFR1026.36(c)(3).
(7)Failuretoprovideaccurateinformationtoaborrowerregardinglossmitigationoptionsandforeclosure,asrequiredby1024.39.
(8)Failuretotransferaccuratelyandtimelyinformationrelatingtotheservicingofaborrower'smortgageloanaccounttoatransferee
servicer.
(9)Makingthefirstnoticeorfilingrequiredbyapplicablelawforanyjudicialornonjudicialforeclosureprocessinviolationof1024.41(f)or
(j).
(10)Movingforforeclosurejudgmentororderofsale,orconductingaforeclosuresaleinviolationof1024.41(g)or(j).
(11)Anyothererrorrelatingtotheservicingofaborrower'smortgageloan.

(c) Contactinformationforborrowerstoasserterrors.Aservicermay,bywrittennoticeprovidedtoaborrower,establishanaddressthata
borrowermustusetosubmitanoticeoferrorinaccordancewiththeproceduresinthissection.Thenoticeshallincludeastatementthatthe
borrowermustusetheestablishedaddresstoassertanerror.Ifaservicerdesignatesaspecificaddressforreceivingnoticesoferror,the
servicershalldesignatethesameaddressforreceivinginformationrequestspursuantto1024.36(b).Aservicershallprovideawrittennotice
toaborrowerbeforeanychangeintheaddressusedforreceivinganoticeoferror.Aservicerthatdesignatesanaddressforreceiptofnotices
oferrormustpostthedesignatedaddressonanyWebsitemaintainedbytheserviceriftheWebsitelistsanycontactaddressfortheservicer.

(d) Acknowledgmentofreceipt.Withinfivedays(excludinglegalpublicholidays,Saturdays,andSundays)ofaservicerreceivinganotice
oferrorfromaborrower,theservicershallprovidetotheborrowerawrittenresponseacknowledgingreceiptofthenoticeoferror.

(e) Responsetonoticeoferror
(1) Investigationandresponserequirements

(i) Ingeneral.Exceptasprovidedinparagraphs(f)and(g)ofthissection,aservicermustrespondtoanoticeoferrorbyeither:

(A)Correctingtheerrororerrorsidentifiedbytheborrowerandprovidingtheborrowerwithawrittennotificationofthecorrection,the
effectivedateofthecorrection,andcontactinformation,includingatelephonenumber,forfurtherassistanceor

(B)Conductingareasonableinvestigationandprovidingtheborrowerwithawrittennotificationthatincludesastatementthatthe
servicerhasdeterminedthatnoerroroccurred,astatementofthereasonorreasonsforthisdetermination,astatementofthe
borrower'srighttorequestdocumentsrelieduponbytheservicerinreachingitsdetermination,informationregardinghowtheborrower
canrequestsuchdocuments,andcontactinformation,includingatelephonenumber,forfurtherassistance.
(ii) Differentoradditionalerror.Ifduringareasonableinvestigationofanoticeoferror,aservicerconcludesthaterrorsoccurredother
than,orinadditionto,theerrororerrorsallegedbytheborrower,theservicershallcorrectallsuchadditionalerrorsandprovidethe
borrowerwithawrittennotificationthatdescribestheerrorstheserviceridentified,theactiontakentocorrecttheerrors,theeffectivedate
ofthecorrection,andcontactinformation,includingatelephonenumber,forfurtherassistance.
 (2) Requestinginformationfromborrower.Aservicermayrequestsupportingdocumentationfromaborrowerinconnectionwiththe
investigationofanassertederror,butmaynot:

(i)Requireaborrowertoprovidesuchinformationasaconditionofinvestigatinganassertederroror
(ii)Determinethatnoerroroccurredbecausetheborrowerfailedtoprovideanyrequestedinformationwithoutconductingareasonable
investigationpursuanttoparagraph(e)(1)(i)(B)ofthissection.
(3) Timelimits

(i) Ingeneral.Aservicermustcomplywiththerequirementsofparagraph(e)(1)ofthissection:

(A)Notlaterthansevendays(excludinglegalpublicholidays,Saturdays,andSundays)aftertheservicerreceivesthenoticeoferror
forerrorsassertedunderparagraph(b)(6)ofthissection.

(B)Priortothedateofaforeclosuresaleorwithin30days(excludinglegalpublicholidays,Saturdays,andSundays)afterthe
servicerreceivesthenoticeoferror,whicheverisearlier,forerrorsassertedunderparagraphs(b)(9)and(10)ofthissection.

(C)Forallotherassertederrors,notlaterthan30days(excludinglegalpublicholidays,Saturdays,andSundays)aftertheservicer
receivestheapplicablenoticeoferror.

(ii) Extensionoftimelimit.Forassertederrorsgovernedbythetimelimitsetforthinparagraph(e)(3)(i)(C)ofthissection,aservicer
mayextendthetimeperiodforrespondingbyanadditional15days(excludinglegalpublicholidays,Saturdays,andSundays)if,before
theendofthe30dayperiod,theservicernotifiestheborroweroftheextensionandthereasonsfortheextensioninwriting.Aservicer
maynotextendthetimeperiodforrespondingtoerrorsassertedunderparagraph(b)(6),(9),or(10)ofthissection.
(4) Copiesofdocumentation.Aservicershallprovidetotheborrower,atnocharge,copiesofdocumentsandinformationrelieduponby
theservicerinmakingitsdeterminationthatnoerroroccurredwithin15days(excludinglegalpublicholidays,Saturdays,andSundays)of
receivingtheborrower'srequestforsuchdocuments.Aservicerisnotrequiredtoprovidedocumentsrelieduponthatconstitute
confidential,proprietaryorprivilegedinformation.Ifaservicerwithholdsdocumentsrelieduponbecauseithasdeterminedthatsuch
documentsconstituteconfidential,proprietaryorprivilegedinformation,theservicermustnotifytheborrowerofitsdeterminationinwriting
within15days(excludinglegalpublicholidays,Saturdays,andSundays)ofreceiptoftheborrower'srequestforsuchdocuments.
(f) Alternativecompliance

(1) Earlycorrection.Aservicerisnotrequiredtocomplywithparagraphs(d)and(e)ofthissectioniftheservicercorrectstheerroror
errorsassertedbytheborrowerandnotifiestheborrowerofthatcorrectioninwritingwithinfivedays(excludinglegalpublicholidays,Satur
days,andSundays)ofreceivingthenoticeoferror.
(2) Errorassertedbeforeforeclosuresale.Aservicerisnotrequiredtocomplywiththerequirementsofparagraphs(d)and(e)ofthis
sectionforerrorsassertedunderparagraph(b)(9)or(10)ofthissectioniftheservicerreceivestheapplicablenoticeofanerrorsevenor
fewerdaysbeforeaforeclosuresale.Foranysuchnoticeoferror,aservicershallmakeagoodfaithattempttorespondtotheborrower,
orallyorinwriting,andeithercorrecttheerrororstatethereasontheservicerhasdeterminedthatnoerrorhasoccurred.

(g) Requirementsnotapplicable
(1) Ingeneral.Aservicerisnotrequiredtocomplywiththerequirementsofparagraphs(d),(e),and(i)ofthissectioniftheservicer
reasonablydeterminesthatanyofthefollowingapply:
(i) Duplicativenoticeoferror.Theassertederrorissubstantiallythesameasanerrorpreviouslyassertedbytheborrowerforwhichthe
servicerhaspreviouslycompliedwithitsobligationtorespondpursuanttoparagraphs(d)and(e)ofthissection,unlesstheborrower
providesnewandmaterialinformationtosupporttheassertederror.Newandmaterialinformationmeansinformationthatwasnot
reviewedbytheservicerinconnectionwithinvestigatingapriornoticeofthesameerrorandisreasonablylikelytochangetheservicer's
priordeterminationabouttheerror.
(ii) Overbroadnoticeoferror.Thenoticeoferrorisoverbroad.Anoticeoferrorisoverbroadiftheservicercannotreasonablydetermine
fromthenoticeoferrorthespecificerrorthattheborrowerassertshasoccurredonaborrower'saccount.Totheextentaservicercan
reasonablyidentifyavalidassertionofanerrorinanoticeoferrorthatisotherwiseoverbroad,theservicershallcomplywiththe
requirementsofparagraphs(d),(e)and(i)ofthissectionwithrespecttothatassertederror.
(iii) Untimelynoticeoferror.Anoticeoferrorisdeliveredtotheservicermorethanoneyearafter:

(A)Servicingforthemortgageloanthatisthesubjectoftheassertederrorwastransferredfromtheservicerreceivingthenoticeof
errortoatransfereeserviceror

(B)Themortgageloanisdischarged.
(2) Noticetoborrower.Ifaservicerdeterminesthat,pursuanttothisparagraph(g),theservicerisnotrequiredtocomplywiththe
requirementsofparagraphs(d),(e),and(i)ofthissection,theservicershallnotifytheborrowerofitsdeterminationinwritingnotlaterthan
fivedays(excludinglegalpublicholidays,Saturdays,andSundays)aftermakingsuchdetermination.Thenoticetotheborrowershallset
forththebasisunderparagraph(g)(1)ofthissectionuponwhichtheservicerhasmadesuchdetermination.
(h) Paymentrequirementsprohibited.Aservicershallnotchargeafee,orrequireaborrowertomakeanypaymentthatmaybeowedona
borrower'saccount,asaconditionofrespondingtoanoticeoferror.
(i) Effectonservicerremedies

(1) Adverseinformation.Afterreceiptofanoticeoferror,aservicermaynot,for60days,furnishadverseinformationtoanyconsumer
reportingagencyregardinganypaymentthatisthesubjectofthenoticeoferror.
 (2) Remediespermitted.Exceptassetforthinthissectionwithrespecttoanassertionoferrorunderparagraph(b)(9)or(10)ofthis
section,nothinginthissectionshalllimitorrestrictalenderorservicerfrompursuinganyremedyithasunderapplicablelaw,including
initiatingforeclosureorproceedingwithaforeclosuresale.
[78FR10876,Feb.14,2013,asamendedat78FR60437,Oct.1,2013]

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