Credit unions should review a June 30 rule temporarily amending certain mortgage servicing requirements under the Consumer Financial Protection Bureau’s (CFPB) Regulation X to assist borrowers affected by the COVID-19 emergency, their federal regulator said Monday in a “regulatory alert.”
The National Credit Union Administration (NCUA), in is alert, noted that the CFPB rule only applies to servicers that service mortgages secured by a borrower’s principal residence. The rule – which takes effect Aug. 31 — does not apply to small servicers, the agency said.
Key provisions of the rule, NCUA said, are that it:
- defines a COVID-19 related hardship as “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic” declared March 13, 2020 (beginning on March 1, 2020) and continued Feb 24 of this year.
- Modifies early intervention requirements of live-contact messages and reasonable diligence obligations to “help ensure that borrowers experiencing a COVID-19 related hardship have timely and accurate information about their loss mitigation options.” That includes that servicers must take additional actions, until Oct. 1, 2022, during live contacts related to a COVID hardship.
- Permits servicers to offer loan modifications to borrowers facing a COVID-19 related hardship based on an evaluation of an incomplete application if specified criteria are met.
- Sets up temporary COVID loss mitigation procedural safeguards to ensure a borrower has a “meaningful opportunity to pursue loss mitigation options.” NCUA said that, from Aug. 31 through Dec. 31 – unless an exception applies – a servicer must meet at least one of the specified safeguards before initiating any judicial or non-judicial foreclosure process where a borrower became more than 120 days delinquent on or after March 1, 2020, and the applicable state statute of limitations regarding foreclosures expires on or after Jan. 1, 2022.