Although perhaps the most visible victims of the COVID-19 pandemic in the mortgage industry have been borrowers struggling to make their payments, others have faced difficulty attempting to handle their particular responsibilities as well. One of these affected groups, somewhat ironically, have been debt collectors, who have faced a considerable and unique challenge when attempting to collect on overdue accounts, as a bevy of moratoriums and hastily written rules have been created to protect consumers from draconian debt collecting methods and foreclosures during the duration of the present emergency. However, a recent announcement by the CFPB aims to add a little clarity to today’s muddy regulatory waters.
On July 30, the CFPB announced that their proposed 60-day pause for the final two amendments of Regulation F (the CFPB’s ‘debt collection rules’) to go into effect will not be extended further. This postponement was first implemented by the CFPB on April 7, delaying the regulation’s original ratification date from September 30 to November 30, 2021. Since then, the CFPB has welcomed feedback from consumer advocates and industry experts as a means to ensure that debt collectors and consumers are appropriately prepared for the law to become official or if a further delay was necessary. The latest dispatch from the CFPB sends a stark and clear message that they believe Regulation F will be ready to roll by this Autumn.
Regulation F’s final two rules directly address the scope of debt collection allowances per federal law. The first rule delineates prohibited behavior by collectors concerning harassment, abuse, unfair practices, and also places limits on the number of times a collector may contact a debtor regarding their outstanding balance. The second, and final, rule requires collectors to provide detailed disclosures to a customer regarding the nature and terms of their debt before alerting a consumer reporting agency (CRA); it also disallows them from threatening to sue a borrower over a ‘time-barred’ debt, i.e. a debt that has passed the statute of limitations and cannot legally be collected.
The CFPB’s follow-up proposal had suggested January 29, 2022 as a possible pushback date on Regulation F and the agency directly noted in its July 30 decision that the door is still open for a further postponement if the financial playing field changes in such a way that the accounts receivable industry requires more preparation. However, such a scenario is unlikely with the world already in the midst of a drawn-out pandemic and debt collectors nationwide would do well to prepare its employees for Regulation F’s rules to be written in stone by November 30.
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