Guidance to help mortgage servicers comply with forbearance requirements in dealing with consumers affected by the coronavirus (COVID-19) pandemic was issued jointly Thursday by the federal consumer bureau and state financial institution regulators.
The guidance, from the Consumer Financial Protection Bureau (CFPB) and the Conference of State Bank Supervisors (CSBS), addresses compliance with Coronavirus Aid, Relief and Economic Security Act (CARES Act) provisions granting a right to forbearance to COVID-19-affected consumers.
The CFPB noted that servicers of federally backed mortgages, such as Fannie Mae or Freddie Mac, Department of Housing and Urban Development, Department of Veterans Affairs, or Department of Agriculture loans, must grant forbearance to borrowers with pandemic-related hardships that may last as long as two consecutive 180-day periods. “Furthermore, additional interest, fees, or penalties beyond the amounts scheduled or calculated should be waived with no negative impact to the borrower’s mortgage contract during the forbearance,” the agency said.
The bureau said mortgage servicers could violate the CARES Act or other applicable law “and potentially cause consumer harm if they were to require documentation from borrowers to prove financial hardship, if they did not grant the forbearance once properly requested, or if they steered borrowers away from forbearance or misled them.”
The CFPB and CSBS released a consumer guide last month on relief options.