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CFPB Proposes Changes to Regulation X's Early Intervention and Loss Mitigation Requirements

Michael Christians • July 21, 2024

On July 10^th, the Consumer Financial Protection Bureau (CFPB) issued a proposed rule that would make several substantive changes to the early intervention and loss mitigation requirements found in Regulation X. The changes would generally take effect 12 months following publication of the final rule in the Federal Register (18 months for language access requirements).

Early Intervention Requirements

The proposed rule would require that additional information be included in the 45-day written notice of delinquency. This additional information includes:

Identification of the secondary market investor of the borrower’s loan (if applicable) and a description of loss mitigation options available from that investor,
A website and telephone number where the borrower can access a list of all loss mitigation options available from the servicer or investor, and
Information about how the borrower can make a request for loss mitigation assistance.

In addition, for those borrowers currently in a forbearance, at least 30 days, but not more than 45 days before the scheduled end date of the forbearance, the servicer must make a good faith attempt to establish live contact and send written notice to the borrower reminding them of the scheduled end date of the forbearance.

Loss Mitigation Rules

The proposed rule eliminates the need for a written application for loss mitigation assistance. A request for assistance can be made orally, or in writing, using any usual or customary communication channel. Once a loss mitigation review cycle begins, the servicer may not charge late fees or initiate/advance the foreclosure process. A loss mitigation review cycle begins on the date the borrower makes a request for loss mitigation assistance and ends on the date the borrower becomes current or has exhausted all possible loss mitigation options.

The proposed rule also implements specific content requirements for a loss mitigation determination notice. The notice must inform the borrower about the amount of time he/she has to accept or reject the offer, detail other loss mitigation options available from the servicer, and remind them of their right to appeal the servicer’s determination. The proposed rule maintains the small servicer exemption to both the early intervention requirements and loss mitigation rules.

Language Access Requirements

Under the rule, all required written communication to the borrower must be provided in both English and Spanish. In addition, the servicer must make all required written communication available in five other languages that cover a significant majority of its non-English speaking customers. Servicers would be required, upon request, to make interpretation services available for all required oral communication. Finally, the servicer must provide all required written communication in all languages that it advertises in.

Comments on the proposed rule will be accepted until September 9th.

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