Licensed collection agencies working on delinquent or defaulted mortgage loans in Connecticut do not need a mortgage servicer license, according to a memo published by State of Connecticut Department of Banking Commissioner Jorge L. Perez.
The memo, released at the end of January, suggests why there had been confusion before:
1) Per Connecticut statute, consumer collection agencies exclued "a person who services loans or accounts for the owners thereof when the arrangement includes, in addition to requesting payment from delinquent consumer debtors, the providing of other services such as receipt of payment, accounting, record-keeping, data processing services and remitting, for loans or accounts which are current as well as those which are delinquent."
2) However -- and hence, the confusion -- collection agencies, in the course of their business, may engage in servicing and, because of this, might fall under the rules of a mortgage servicer. Specifically: needing the mortgage servicer license.
Commissioner Perez, in his memo, concludes, "This department recognizes that licensed consumer collection agenies are already licensed and regulated by this department...and the requirement that a licensed consumer collection agency obtain a separate license as a mortgage servicer from this department for such activities may be redundant and unduly burdensome."
The full memo can be found here.