Featured Product

    CFPB on Treatment of Certain COVID-19 Related Loss Mitigation Options

    June 30, 2020

    CFPB is issuing an interim final rule to amend the Real Estate Settlement Procedures Act (Regulation X) to temporarily permit mortgage servicers to offer certain loss-mitigation options based on the evaluation of an incomplete loss-mitigation application. Servicers may offer eligible loss-mitigation options to a borrower that has received a payment forbearance under the program that was made available to borrowers experiencing financial hardship due, directly or indirectly, to the COVID-19 emergency, including one offered pursuant to section 4022 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Servicers may also offer eligible loss-mitigation options to a borrower that has had other principal and interest payments that are due and unpaid as a result of a financial hardship due, directly or indirectly, to the COVID-19 emergency. This interim final rule becomes effective on July 01, 2020. Comments must be received on or before August 14, 2020.

    Regulation X generally requires servicers to obtain a complete loss-mitigation application before evaluating a mortgage borrower for a loss-mitigation option, such as a loan modification or short sale. Regulation X provides an exception from this requirement for certain short-term loss mitigation options. Due to the particular needs of mortgage servicers and borrowers during the COVID-19 emergency, CFPB is amending Regulation X. The amendment conditions eligibility for the new exception on the loss-mitigation option satisfying three criteria:

    • The loss-mitigation option must permit the borrower to delay paying certain amounts until the mortgage loan is refinanced, the mortgaged property is sold, the term of the mortgage loan ends, or, for a mortgage insured by Federal Housing Administration, the mortgage insurance terminates. These amounts include, without limitation, all payments forborne under a payment forbearance program made available to borrowers experiencing financial hardship due to the COVID-19 emergency, including one made pursuant to CARES Act. These amounts also include, without limitation all other principal and interest payments that are due and unpaid by a borrower experiencing financial hardship due to the COVID-19 emergency. 
    • Any amounts that the borrower may delay paying through the loss- mitigation option do not accrue interest; the servicer does not charge any fee in connection with the loss mitigation option; and the servicer waives all existing late charges, penalties, stop payment fees, or similar charges promptly upon the borrower's acceptance of the loss mitigation option.
    • The borrower's acceptance of the loss-mitigation offer must resolve any prior delinquency. These criteria maintain important protections for borrowers and are intended to align with the COVID-19 payment deferral option announced by the Federal Housing Finance Agency (FHFA) and other similar programs.

    The interim final rule also excludes servicers from certain regulatory requirements if a borrower accepts an option offered pursuant to the new exception. Specifically, the interim final rule provides that the servicer is not required to continue the reasonable diligence efforts Section 1024.41(b)(1) otherwise requires or send the acknowledgement notice Section 1024.41(b)(2) otherwise requires.

     

    Related Links

    Comment Due Date: August 14, 2020

    Effective Date: July 01, 2020

     Keywords: Americas, US, Banking, Securities, COVID-19, Real Estate, Regulation X, Credit Risk, CARES Act, Mortgage, CFPB

    Related Articles
    News

    BCBS Consults on Principles for Operational Risk and Resilience

    BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.

    August 06, 2020 WebPage Regulatory News
    News

    FSI Note Discusses Challenges Associated with COVID Relief Measures

    The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.

    August 06, 2020 WebPage Regulatory News
    News

    HKMA Announces Repayment Deferment Under Payment Holiday Scheme

    HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.

    August 05, 2020 WebPage Regulatory News
    News

    ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal

    The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.

    August 05, 2020 WebPage Regulatory News
    News

    MAS Announces Key Initiatives to Support Adoption of SORA

    MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.

    August 05, 2020 WebPage Regulatory News
    News

    BoE Updates Template and Definitions for Form ER

    BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.

    August 05, 2020 WebPage Regulatory News
    News

    PRA to Extend Temporary High Balance Coverage Amid COVID Crisis

    PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.

    August 04, 2020 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC

    EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.

    August 03, 2020 WebPage Regulatory News
    News

    EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10

    EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.

    August 03, 2020 WebPage Regulatory News
    News

    EC Sets Out Updated Technical Information for Solvency II Calculations

    EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.

    August 03, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5635