Mortgage servicers’ ability to place consumers in short-term forbearance programs like those required by new legislation enacted in response to the coronavirus crisis is outlined in a policy statement issued by federal financial institution and state regulatory agencies Friday.
The statement notes that under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), borrowers in a federally backed mortgage loan experiencing a financial hardship due to the COVID-19 pandemic may request forbearance by making a request to their mortgage servicer and affirming that they are experiencing a financial hardship during the pandemic. In response, servicers must provide a CARES Act forbearance that allows borrowers to defer their mortgage payments for up to 180 days and possibly longer.
For example, the regulators said, the statement clarifies that the agencies do not intend to take supervisory or enforcement action against mortgage servicers for delays in sending certain early intervention and loss mitigation notices and taking certain actions relating to loss mitigation set out in the mortgage servicing rules, provided that servicers are making good faith efforts to provide these notices and take these actions within a reasonable time.
The statement was issued by the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corp. (FDIC), the Federal Reserve, the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and state banking regulators (under the auspices of the Conference of State Bank Supervisors [CSBS], a professional organization).
“To further enable short-term payment forbearance programs or short-term repayment plans, mortgage servicers offering these programs or plans will not have to provide an acknowledgement notice within five days of receipt of an incomplete application, provided the servicer sends the acknowledgment notice before the end of the forbearance or repayment period,” according to the statement.
The agencies said that the guidance also reminds servicers that there is flexibility already in the rules with respect to the content of certain notices. The statement also confirms, the agencies said, that they do not intend to take supervisory or enforcement action against mortgage servicers for delays in sending annual escrow statements, provided that servicers are making good faith efforts to provide these statements within a reasonable time. The agencies said they acknowledged that servicers are experiencing high call volumes from consumers seeking help.