Blog Post

Joint Statement on Supervisory and Enforcement Practices Regarding Mortgage Servicing

michaelchristians • April 6, 2020

On April 3 ^rd , the joint agencies (CFPB, Federal Reserve, FDIC, NCUA and OCC) issued a statement on supervisory and enforcement practices regarding the mortgage servicing rules. The statement relaxes a number of the mortgage servicing compliance requirements found under federal law and provides an overview of additional consumer protections available to those affected by the Coronavirus pandemic.

CARES Act Forbearance

On March 27 ^th , the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. Under the CARES Act, those experiencing a financial hardship in connection with their federally backed mortgage loan as a result of the COVID-19 emergency may request a forbearance. Upon receipt of a borrower’s request for a forbearance, the mortgage servicer must provide a forbearance for up to 180 days. The forbearance may be extended for an additional 180-day period if the borrower makes such a request during the initial forbearance period. The only documentation the mortgage servicer may require in connection with a CARES Act forbearance is an attestation from the borrower that he/she is experiencing a financial hardship as a result of the COVID-19 emergency.

Mortgage Servicing Rules

Loss Mitigation Procedures

Section 1024.41 of Regulation X contains a number of requirements mortgage servicers must follow in connection with loss mitigation options offered to consumers. The joint agency statement issued on April 3 ^rd reminds mortgage servicers of the following:

Small servicers (those who service 5,000 or fewer mortgage loans) are already exempt from most of the requirements found in Section 1024.41.
A CARES Act forbearance is considered a short-term loss mitigation option under Section 1024.41(c)(2)(iii) of Regulation X. Short-term loss mitigation options are already exempt from a number of the loss mitigation procedural requirements.

Early Intervention Requirements

Section 1024.39 of Regulation X requires mortgage servicers not considered small servicers to:

Make a good faith attempt to establish live contact with a delinquent borrower not later than his/her 36 ^th day of delinquency; and
Provide a written notice to the borrower not later than his/her 45 ^th day of delinquency.

The joint agency statement issued on April 3 ^rd provides that the regulators do not intend to cite in an examination or bring an enforcement action against servicers for delays in meeting these timing requirements.

Continuity of Contact Provisions

Under Section 1024.40 of Regulation X, most servicers are required to establish a single point of contact for delinquent borrowers (small servicers are exempt from this requirement). For mortgage servicers struggling to staff their customer service call centers during the COVID-19 emergency, the joint agency statement issued on April 3 ^rd reminds them that they have discretion in determining whether to assign a single person or a team of personnel to a delinquent borrower.

Annual Escrow Account Statements

Section 1024.17 of Regulation X requires mortgage servicers to provide an annual escrow account statement within 30 days of completion of the escrow account computation year. The joint agency statement issued on April 3 ^rd provides that the regulators do not intend to cite in an examination or bring an enforcement action against servicers for delays in providing this annual escrow account statement.

Payoff Statements

Under Section 1026.36 of Regulation Z, mortgage servicers are required to respond to a request for a payoff statement within seven business days. The joint agency statement issued on April 3 ^rd states that servicers may provide a payoff statement within a reasonable period of time if unable to do so within seven business days due to the COVID-19 emergency.

This and additional guidance for financial institutions dealing with the Coronavirus pandemic is available on our COVID-19 resource page at www.mchristiansconsulting.com. Stay safe everyone!

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