ALEXANDRIA, Va.–Credit unions are being urged to review a rule that temporarily amends certain mortgage servicing requirements under the Consumer Financial Protection Bureau’s Regulation X to assist borrowers affected by the COVID-19 emergency.
In a Regulatory Alert to credit unions, NCUA said the CFPB rule, enacted June 30, only applies to servicers that service mortgages secured b
y a borrower’s principal residence. The rule – which takes effect Aug. 31 — does not apply to small servicers, according to NCUA.
Among the key provisions in the rule NCUA urged CUs to be aware of are that it:
- Defines a COVID-19 related hardship as “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic” declared March 13, 2020 (beginning on March 1, 2020) and continued Feb 24 of this year
- Modifies early intervention requirements of live-contact messages and reasonable diligence obligations to “help ensure that borrowers experiencing a COVID-19 related hardship have timely and accurate information about their loss mitigation options.” NCUA said that includes that servicers must take additional actions, until Oct. 1, 2022, during live contacts related to a COVID hardship
- Permits servicers to offer loan modifications to borrowers facing a COVID-19-related hardship based on an evaluation of an incomplete application if specified criteria are met
- Sets up temporary COVID loss mitigation procedural safeguards to ensure a borrower has a “meaningful opportunity to pursue loss mitigation options.” The agency said that unless an exception applies, from Aug. 31 through Dec. 31 a servicer must meet at least one of the specified safeguards before initiating any judicial or non-judicial foreclosure process where a borrower became more than 120 days delinquent on or after March 1, 2020, and the applicable state statute of limitations regarding foreclosures expires on or after Jan. 1, 2022.