Join us for a special opportunity to hear directly from the CFPB about mortgage servicing in the COVID-19 era. On October 14 from 2:00-3:00 p.m. ET, Bradley will host a Q&A session with Allison Brown of the CFPB's Office of Supervision Policy to discuss the CFPB’s supervisory expectations as the industry grapples with CARES implementation and other challenges arising from the coronavirus crisis.
As Deputy Assistant Director for Servicing in the Office of Supervision Policy -- the unit that sets policy for CFPB examiners across the country -- Allison has deep experience with mortgage servicing issues and has been at the CFPB since its early days. She is a leader within the CFPB's supervision function on policy issues relating to mortgage servicing and works closely with enforcement, rulemaking, and other Bureau offices on servicing issues.
- The CFPB observed that mortgage servicers with strong foundational compliance management systems were generally better prepared to manage the challenges associated with COVID-19.
- Prioritized assessment work is ongoing, and the CFPB will communicate findings to the industry in the near future.
- Mortgage servicing will likely be a higher priority for CFPB supervision activity in the future.
- The CFPB reiterated in numerous contexts that it will be looking for good faith efforts at compliance.
- CFPB examiners will also be looking to make sure that servicers are attentive to laws and guidance as they are issued, and are conducting adequate monitoring and promptly taking necessary actions to correct issues as they are identified. Training and re-training should be a focus and should be documented.
- In terms of loss mitigation, the CFPB will be mindful of when guidance, programs, and requirements were issued. The CFPB will be validating that borrowers were provided clear and readily understandable information about available assistance, and that any such information was accurate when provided. For example, the CFPB is concerned that some borrowers with GSE loans were told that they would be required to repay forborne amounts in a lump sum after the GSEs issued contrary statements to the public.
- The CFPB recognizes that not all foreclosures can be avoided, but it is focused on borrowers being offered post-forbearance options in a robust manner that meet the requirements of Regulation X.
- Sending a new breach letter (if one was sent before COVID-19) is recommended as a best practice after forbearance if the other efforts to cure any delinquencies are not successful. The CFPB looks at these types of things from the borrower’s perspective.
- Mortgage servicers can accept lump sum escrow shortage repayments, but cannot include lump sum repayment as an option on escrow statements when there is a shortage of greater than or equal to one month’s escrow payment. The lump sum repayment option can be communicated to borrowers in other ways.