On June 28th, the CFPB issued a final mortgage servicing rule that encourages borrowers and servicers to work together to avoid foreclosure in the face of COVID-19 hardships. The final rule will:
- Allow loan modification options based on incomplete loss mitigation applications (subject to set requirements and restrictions);
- Upon live contact, temporarily require servicers to provide certain information on homeownership counseling and:
- provide borrowers not currently in a forbearance program information on any available COVID-19 payment relief;
- for certain borrowers in forbearance programs that are nearing completion or recently ended, provide information on the borrower’s forbearance program and other available relief options (with the first live contact).
- Temporarily implement additional “procedural safeguards” that must generally be met before initiating foreclosure; and,
- Require servicers to contact certain borrowers at least 30 days before the end of a COVID-19-related short-term payment forbearance program.
- This applies to borrowers that remain delinquent after a short-term payment forbearance program was offered on the basis of an incomplete loss mitigation application. Servicers will need to reach out to see if the borrower wishes to complete the application for additional help. If so, the servicer must work to complete it before the end of the forbearance program.
You can read an Executive Summary of the Final Rule here.
Small servicers are technically exempt from the final rule. It’s obvious the CFPB is focused on preventing “avoidable” foreclosures and is “closely monitoring” servicers to learn how they are working with borrowers to reach positive outcomes. There’s not much time to comply, as the rule takes effect August 31, 2021. To learn more about this and other mortgage servicing requirements, join us August 12th for our Mortgage Servicing webinar!
Published
2021/07/02