First Live Contact of Borrower by Servicer After Default–Loss Mitigation Rules

Under § 1024.39(a) of Regulation X, a servicer must establish or make good faith efforts to establish live contact with a delinquent borrower not later than the 36th day of the borrower’s delinquency and, promptly after establishing live contact, inform such borrower about the availability of loss mitigation options “if appropriate.” The Bureau has added comment 39(a)-3.i to clarify that it is within a servicer’s reasonable discretion to determine whether informing a borrower about the availability of loss mitigation options is appropriate under the circumstances. To illustrate, comment 39(a)-3.i provides examples demonstrating when a servicer has made a reasonable determination regarding the appropriateness of providing information about loss mitigation options. Comment 39(a)-3.i.A illustrates a scenario in which a servicer provides information about the availability of loss mitigation options to a borrower that notifies a servicer during live contact of a material adverse change in the borrower’s financial circumstances that is likely to cause the borrower to experience a long-term delinquency for which loss mitigation options may be available. Comment 39(a)-3.i.B illustrates a scenario in which a servicer does not provide information about the availability of loss mitigation options to a borrower who has missed a January 1 payment and notified the servicer that full late payment will be transmitted to the servicer by February 15.