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Reg F, Part II, Out Today Around Noon Eastern

 

Here's what we know as of now (per a phone call with the CFPB):

  • The rule will be released around noon Eastern. (Though when they said that last time, it went out a little earlier.)
  • The rule is 330+ pages long -- and a lot of that is an in-depth discussion of the validation notice.
  • The three components of Part II are:
    • Validation notices
    • Passive collections
    • Time-barred debt (and, just a sneak preview for later in this bulleted list, there are a LOT of changes to time-barred debt. The validation notices are essentially what we saw in the NPRM, but time-barred debt is...I'm getting ahead of myself.)
  • Validation Notices
    • There will be a requirement on validation notices to have a Bureau-provided link to a website for consumers' rights.
    • State disclosures will be allowed on the back.
    • If states require time-barred debt disclosures, those will be allowed on the front.
    • For safe harbor purposes, you have to use the provided form exactly (with the provisions for state disclosures on the back and time-barred debt on the front)
  • Passive Collections
    • Agencies cannot furnish to CRAs until they've spoken, mailed, or somehow otherwise communicated with the consumer. 
    • If the communication is in writing (regardless if it's via postal mail or electronic communication) agencies must allow a reasonable time to pass between the communication and the furnishing.
    • That reasonable time is 14 days. This is for all communications, whether postal or electronic.
    • Yes, this is dumb.
  • Time-barred Debts
    • This is the greatest departure from the NPRM.
    • Prohibitions remain against suing or threatening suit on time-barred debt.
    • This will have a "known or should have known" component to it, w/r/t if the debt is time-barred or not. (This seems to only be applicable to agencies that pursue legal action.)
    • This will be a strict liability portion of Part II.
    • Agencies cannot be sued for lettering/communicating on time-barred debt.
    • There is no requirement, per Reg F (and that distinction is important), to disclose in your letter that the debt is out-of-stat.
    • You do not have to disclose that the debt may be, or is, time-barred.
    • You do not need to let a consumer know that a payment will re-toll the debt.
    • HOWEVER, state requirements on time-barred debt remain in effect and supercede Reg F.
    • (The reason for this unexpected about-face is: banning time-barred debt outright would make those assets valueless and a hardship on agencies/creditors.)
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