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Over the last week, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) has sharpened its focus on the mortgage servicing industry. Knowing that millions of mortgage borrowers will exit COVID-19 moratoriums and forbearance plans in the fall, the Bureau first issued a compliance bulletin putting servicers on notice that it will use all supervisory and enforcement tools against those not ready to process loss mitigation requests from these borrowers. The CFPB followed by issuing a proposed rule that would amend the Real Estate Settlement Procedures Act (RESPA) Regulation X so as to prevent “avoidable foreclosures” on this borrower cohort.
REGULATORY DEVELOPMENTS
CFPB Warns Mortgage Servicers to Prepare Now for Anticipated Surge of Homeowners Needing Assistance
On March 31, the CFPB issued Compliance Bulletin 2021-02, promising accountability for servicers who fail to put struggling families first and asking them to prepare now to deal with the foreseeable surge of borrowers in need of loss mitigation assistance when the pandemic-related federal emergency mortgage protections expire in June. The CFPB communicated that it will be monitoring how mortgage servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation to prevent avoidable foreclosures, expecting servicers to:
Contact borrowers in forbearance before the end of the forbearance period so they have time to apply for help;
Tuesday, April 6, 2021
Over the last week, the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) has sharpened its focus on the mortgage servicing industry. Knowing that millions of mortgage borrowers will exit COVID-19 moratoriums and forbearance plans in the fall, the Bureau first issued a compliance bulletin putting servicers on notice that it will use all supervisory and enforcement tools against those not ready to process loss mitigation requests from these borrowers. The CFPB followed by issuing a proposed rule that would amend the Real Estate Settlement Procedures Act (RESPA) Regulation X so as to prevent “avoidable foreclosures” on this borrower cohort.