Mortgage servicers are currently being inundated with requests from borrowers impacted by COVID-19 for forbearance and other types of payment relief. Tracking, making sense of, and then complying with the guidance and requirements that are being issued and then modified – seemingly on a daily basis – by the federal government, the GSEs, and various states is proving to be a challenge for many, especially at a time when resources may already be limited or stretched thin. While juggling all of the new expectations that have suddenly been thrust upon servicers, the industry must not lose sight of the CFPB’s mortgage servicing rules related to loss mitigation that have been in place since 2014 and are likely to come up when a borrower requests assistance. COVID-19 related forbearance requests are likely to implicate concepts that have challenged servicers since the rules went into effect, including verbal loss mitigation applications and offering short-term options based upon incomplete applications.
This webinar discusses what you need to know about the current forbearance guidelines, with a focus on how a servicer can ensure it also complies with the applicable loss mitigation rules in Regulation X.
- Loss mitigation applications can be submitted verbally, particularly if you offer any type of forbearance or repayment over the phone.
- Any type of disaster related forbearance or assistance is loss mitigation, so you must follow Regulation X’s processes and send the required notices.
- The implications of a verbal application are broader than COVID-19 related relief.
- A request for CARES Act forbearance and affirmation of hardship qualifies as an incomplete loss mitigation application.
- Be mindful of other processes and communications where borrower confusion may arise, e.g. monthly billing statements.