Servicing of a covered mortgage transfers on September 1. The old servicer receives the borrower’s October payment on October 8, within the applicable contractual due date including any permitted grace period. May the new servicer charge a late fee because forwarding delays its receipt?
Correct Answer
D) No late fee: the 60-day window after the transfer covers this payment
D. The timely payment to the old servicer is protected within the 60-day transfer period. October 8 falls within 60 days beginning September 1. Receipt by the transferor within the applicable due date, including contractual grace, prevents treating this payment as late. A forwarding delay does not remove that protection. Scope and exceptions: This is not a general 60-day payment holiday. Mailing alone does not establish timely receipt. The old servicer must promptly forward the payment or return it with notice of the proper recipient. Source: Section 1024.33(c)(1)–(2) and comment 33(c)(1)-1 — https://www.consumerfinance.gov/rules-policy/regulations/1024/33/
Why This Is the Correct Answer
D. The timely payment to the old servicer is protected within the 60-day transfer period. October 8 falls within 60 days beginning September 1. Receipt by the transferor within the applicable due date, including contractual grace, prevents treating this payment as late. A forwarding delay does not remove that protection. Scope and exceptions: This is not a general 60-day payment holiday. Mailing alone does not establish timely receipt. The old servicer must promptly forward the payment or return it with notice of the proper recipient.
Why the Other Options Are Wrong
Option A: No late fee, but only where the borrower proves the notice never arrived
No proof that the transfer notice failed to arrive is required by this provision.
Option B: A late fee is proper once 30 days have passed since the effective date
The protection is 60 days, not 30.
Option C: A late fee is proper, because the payment reached the wrong servicer
Payment to the old servicer is the situation the protection addresses.
Exam Tip
Check transfer date and receipt by the old servicer—not just when the borrower mailed payment.
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