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| NAFCU Details CFPB's Proposed Rule to Preempt Foreclosures |
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NAFCU Tuesday sent a Regulatory Alert detailing the CFPB's proposed mortgage servicing changes to protect borrowers affected by the coronavirus pandemic under the Real Estate Settlement Procedures Act (RESPA), or Regulation X.
The bureau issued the proposal earlier this month in an attempt to preempt an expected wave of foreclosures once relief provisions expire. In the Regulatory Alert, NAFCU highlights that the proposed rulemaking would:
• create a temporary COVID-19 emergency pre-foreclosure review period that would prohibit mortgage servicers from making the first notice or filing required for judicial or non-judicial foreclosure until after Dec. 31, 2021;
• allow streamlined loan modification options to borrowers with COVID-19-related hardships based on an evaluation of an incomplete loan modification, provided certain criteria are met; and
• amend the early intervention requirements and requires mortgage servicers to discuss additional COVID-19-related information during live contact with borrowers not in a forbearance program where available options exist, and provide information for those borrowers in a forbearance program at least 30 days before the end of the forbearance program. The proposed early intervention requirements would sunset Aug. 31, 2022.
NAFCU flags that this rulemaking would impact all credit unions that service federally related mortgage loans as defined in Regulation X, though the small servicer exemption would still apply, and could increase costs and keep delinquent loans on books for a longer period of time.
NAFCU poses additional questions for credit unions to provide feedback on. Comments are due to NAFCU May 7; comments are due to the CFPB May 10.
The bureau previously issued a compliance bulletin outlining six areas it will focus on as it monitors how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation as forbearance relief provisions expire. It noted in its mortgage servicing proposal that 3 million homeowners are currently behind on their mortgage payments.
The bureau and Federal Trade Commission (FTC) also recently announced they are investigating potentially illegal eviction practices. The efforts follow a CFPB report on housing insecurity, which found nearly 10 percent of U.S. households could face eviction and foreclosure when COVID-related relief provisions expire in the coming months.
NAFCU has consistently flagged its concerns related to increased forbearance requests amid the coronavirus pandemic and how credit unions are working with members impacted by the crisis with regulators and lawmakers.
Copyright 2021. NAFCU. (link) |
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