Review of Recent CFPB Servicing Actions Bulletin 2021 02 and COVID 19 Proposed Rule

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In recent days, the CFPB has taken significant actions that will have a lasting impact on mortgage servicers. First, on April 1, the CFPB issued Bulletin 2021-02, warning servicers that being “unprepared is unacceptable.” This bulletin provides important insight into the CFPB’s supervision and enforcement priorities related to servicers’ handling of the COVID-19 crisis. Next, on April 5, the CFPB released a notice of proposed rulemaking that would provide certain COVID-19-related protections by amending the existing early intervention and loss mitigation sections of Regulation X. Notably, the proposal essentially imposes a moratorium on new foreclosure actions until January 1, 2022.

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Key Takeaways

  • On April 5, the CFPB released a proposed rule that has four main components, perhaps the most controversial being the “temporary emergency COVID-19 pre-foreclosure review period.”
  • The CFPB is proposing for the rule to become effective on August 31, 2021, which will inevitably mean a very short implementation period. Servicers should prepare as much as they can now.
  • On April 1, the CFPB released a bulletin warning mortgage servicers that being “unprepared is unacceptable,” referring to the upcoming influx in borrowers who need to transition from forbearance to some type of post-forbearance options.
  • The CFPB emphasized that servicers must focus on having compliant and effective loss mitigation processes in place, and that it will take those factors into account when determining whether to take action for potential violations.
  • We’re here to help – whether you need help understanding or drafting comments on the proposed rule or are interested in conducting a targeted risk assessment based on the CFPB’s bulletin, please don’t hesitate to reach out.