John Zasada, Compliance Consulting Director, Financial Institutions Group
On June 28, 2021, the Consumer Financial Protection Bureau (CFPB) issued a 208-page final rule amending the Real Estate Settlement Procedures Act (RESPA) regarding COVID-19 related hardship provisions. This 2021 Mortgage Servicing COVID-19 Rule is effective Aug. 31, 2021.
According to the CFPB, over two million homeowners are still in forbearance, and most of those are projected to be in forbearance for more than a year. Over 3% of all borrowers are now four months or more behind on their mortgages, which is the point when a foreclosure may be initiated. The new rules are intended to require servicers to increase their efforts to prevent avoidable foreclosures.
The 2021 rule contains several temporary provisions:
Require special COVID-19 loss mitigation procedural safeguards to ensure a borrower has a meaningful opportunity to apply for loss mitigation before the mortgage account is referred to foreclosure after national foreclosure moratoria have ended.
Provide servicers the ability to offer borrowers certain COVID-19-related streamlined loan modifications without a complete loss mitigation application.
Require the provision of additional information promptly after early intervention live contacts are established with certain delinquent borrowers.
Establish timing requirements for when servicers must renew reasonable diligence efforts to obtain complete loss mitigation applications from certain borrowers.
For more information on how the new mortgaging service rule impacts your financial institution, contact Doeren Mayhew’s regulatory compliance specialists.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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