A joint release from the Consumer Financial Protection Bureau (CFPB) and the Conference
of State Bank Supervisors cautions mortgage servicers about their obligations
in complying with the Coronavirus Aid, Relief and Economic Security (CARES) Act.
The Act includes provisions granting a right to forbearance to mortgaged homeowners
impacted by the COVID-19 pandemic.
Under these provisions, servicers of federally-backed mortgages
including those from the GSEs Fannie Mae and Freddie Mac as well as FHA, the
VA, and USDA must grant forbearance to borrowers with pandemic-related
hardships for as long as two consecutive 180-day periods during
the National Emergency declared in response to the outbreak.
Servicers are advised by CFPB
and the Supervisors that they can approve a shorter than 180-day plan, but only
at the borrowers request and acceptance. In such cases, the servicers must
default to 180 days if the borrower subsequently requests a longer forbearance period.
Forbearance must be granted by servicers to
borrowers who request it and provide servicers with attestation to a financial hardship
caused by the emergency. Servicers are not permitted to require any additional
documentation of hardship. Servicers who fail to grant properly requested
forbearance, steer borrowers away from or misled them about it may not be in
compliance with the Act. Furthermore,
additional interest, fees, or penalties beyond the amounts scheduled or
calculated should be waived with no negative impact to the borrower's mortgage
contract during the forbearance.
Examiners will evaluate communications
between borrowers and their servicers, including the servicer's communication
of repayment options for legal compliance or resulting consumer harm. A
servicer that offers very limited repayment options when others are reasonably
available could, depending on the facts and circumstances, be at risk of legal
violation or causing consumer harm.
Loan originators are also subject to CARES
Act provisions. They must be careful about any closing attestations, notices,
or other communications that might discourage borrowers from seeking
forbearance after their loans close or mislead them about their rights to do so.
Examiners will evaluate originator communications with borrowers for compliance
or causing consumer harm.
The release warns that the CARES Act interacts
with multiple rules or guidelines from regulators and the results may not
always be clear. The full document provides a list of these and is available at
https://files.consumerfinance.gov/f/documents/cfpb_csbs_industry-forbearance-guide_2020-06.pdf.