CARES Act Forbearance and Foreclosure

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Treliant Takeaway:

Treliant’s Mortgage Operations & Compliance practice area specializes in assisting servicers with enhancing processes, controls, and procedures to adhere to federal regulations and investor guidelines.

Article Highlights:

The Consumer Financial Protection Bureau (CFPB) and the Conference State Bank Supervisors (CSBS) published guidance on the CARES Act Forbearance & Foreclosure.

  • Mortgage servicers must, among other things, abide by the CARES Act, federal regulations, and investor servicing guidelines. How the CARES Act interacts with rules or guidelines from regulators may not always be clear.  Of Note:
    • Servicers can grant forbearance periods for shorter than 180 days but must default to the term requested by the borrower up to 180 days. The servicer’s board and management must provide the resources necessary to be responsive to borrowers if granting a period other than 180 days.  No further attestations from the borrower are required after the initial affirmation of hardship.
    • Servicers may not require information from the borrower supporting the need for forbearance but may work with the borrower to better understand the situation so long as there they do not mislead or dissuade the borrower regarding forbearance. The information obtained must have no bearing on the provision of forbearance.
    • Communications between borrowers and both lenders and servicers will be evaluated during examination. Misleading a borrower concerning rights under the CARES Act could put the lender at risk of committing a legal violation or causing consumer harm.
  • The Guidance identified the following regulations and guidelines that pertain to servicers’ determinations as to how to implement the CARES Act requirements:
    • Regulations X and Z
    • CFPB, OCC, FDIC, FRB, NCUA, and CSBS Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act
    • CFPB Mortgage Servicing Rules FAQs related to the COVID-19 Emergency
    • Fannie Mae Lender Letter (LL-2020-02)
    • Freddie Mac Bulletin 2020-10 Temporary Servicing Guidance Related to COVID-19
    • Federal Housing Administration COVID-19 Questions and Answers
    • Veterans Benefits Administration Extended Relief Under the CARES Act for those Affected by COVID-19