Regulation X Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. This put in to place two key protections for homeowners with federally backed mortgages:

  1. A foreclosure moratorium
  2. A right to forbearance for homeowners who are experiencing financial hardship due to the COVID-19 emergency

A subsequent statement was released by six agencies on April 3, 2020, which addressed the vital role mortgage servicers play in assisting consumers who face challenges in paying their mortgages, as well as the temporary business disruptions and challenges for mortgage servicers, including staffing challenges, that could impede their ability to assist consumers at this critical time.  

The agencies included the following:

  • The Consumer Financial Protection Bureau (Bureau)
  • Board of Governors of the Federal Reserve System (Federal Reserve)
  • The Federal Deposit Insurance Corporation (FDIC)
  • The National Credit Union Administration (NCUA)
  • The Office of the Comptroller of the Currency (OCC)
  • State banking regulators

To ensure that servicers have the capacity to offer these protections and continue their efforts in assisting consumers, the agencies informed servicers of the agencies’ flexible supervisory and enforcement approach to the Regulation X mortgage servicing rules.

As of April 3, 2020, and until further notice, in evaluating compliance with Regulation X, 12 CFR 1024, if a mortgage servicer offers or provides a borrower a short-term option, including a CARES Act forbearance, the agencies don’t intend to take supervisory or enforcement action against servicers for the following:

  • Delays in sending the loss mitigation-related notices
  • Delays in establishing or making good faith efforts to establish live contact with delinquent borrowers
  • Delays in sending the written early intervention notice to delinquent borrowers
  • Delays in sending the annual escrow statement

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