Regulators Relax Supervision and Enforcement Over Mortgage Servicers in Light of COVID-19

On April 3, 2020, the CFPB, Federal Reserve, FDIC, NCUA, OCC, and the Conference of State Bank Supervisors issued a Joint Statement concerning supervision and enforcement of mortgage servicers.  These agencies understand that mortgage servicers will be offering short-term payment forbearance options, such as the forbearance option provided for under the CARES Act, or short-term repayment plans to borrowers facing hardships related to the pandemic.

The Joint Statement clarifies “the application of the Regulation X mortgage servicing rules and the agencies’ approach to supervision and enforcement related to the rules during this emergency, including those applicable to short-term options.”  The agencies do not intend to take supervisory or enforcement action for delays in (1) “sending the loss mitigation-related notices and taking” certain actions concerning loss mitigation, (2) “establishing or making good faith efforts to establish live contact with delinquent borrowers,” and (3) “sending the written early intervention notice to delinquent borrowers;” provided that servicers make good faith efforts to do so within a reasonable time.  

Nor will they take action against servicers offering short-term payment forbearance programs or short-term repayment plans that fail to provide an acknowledgement notice within five days of receipt of an incomplete application so long as the acknowledgment notice is sent before the end of the forbearance or repayment period.  The agencies also do not intend to take supervisory or enforcement action for delays in sending annual escrow statements so long as good faith efforts are made to provide the statements within a reasonable time. 

Finally, the CFPB concurrently issued Mortgage Servicing Rules FAQs to provide clarity “about existing flexibility in the mortgage servicing rules” that mortgage servicers can use to help consumers during the COVID-19 emergency.