Article Summary
The Consumer Financial Protection Bureau (CFPB) has proposed a rule to scale back some procedures added for mortgaged homeowners with hardships due to COVID-19. The temporary requirements, implemented during the pandemic, have mostly ended, and the CFPB plans to address one remaining aspect through a revision to broader regulation. The proposed change aligns with the Trump administration’s deregulatory agenda, with a 30-day comment period ending on June 16.
What This Means for You
- Servicers may face procedural changes as the CFPB rescinds certain COVID-19 mortgage servicing rules.
- Industry stakeholders should review and submit comments on the proposed rule before the June 16 deadline.
- The CFPB is expected to continue reviewing and addressing mortgage servicing regulations in 2024, incorporating lessons learned from the pandemic.
- Keep an eye on the 2024 revision of the larger Regulation X governing servicing, which will replace the 2021 rule and contains important changes for the industry.
Original Post
The Consumer Financial Protection Bureau published a proposed rule in the Federal Register on Friday that could scale back some procedures added for mortgaged homeowners with hardships due to COVID-19.
The temporary requirements added during the pandemic have largely sunset, and one aspect that has not is on track to be addressed by a planned revision to broader regulation, according to the proposal Russell Vought, acting director of the Consumer Financial Protection Bureau, authorized.
“In light of the end of the COVID-19 pandemic, these regulations needlessly complicate Regulation X
without commensurate benefits,” Russell Vought, acting director at the Consumer Financial Protection Bureau, said in the proposed rule.
The proposed change, in line with
One sticking point in rolling back the rule may be the flexibility some in the industry have been using in the section that hasn’t officially expired, according to law firm Bradley Arant Boult Cummings.
“In our opinion, the CFPB is understating the impact of rescinding the anti-evasion exception for some loan modifications,” Jonathan Kolodziej and Jason Bushby, attorneys at the law firm, wrote in
The attorneys showed concern that servicers have been using that aspect of the 2021 final rule to “continue offering certain loan modification options in a streamlined fashion” and rescinding it could require procedural change.
The
Two other parts of the 2021 rule that have already sunsetted were some temporary borrower contact requirements and extra steps before starting foreclosure.
The early intervention requirements ended Oct. 1, 2022 and the additional pre-foreclosure procedures only applied to loans to foreclosure starts before Jan. 1 of that same year.
Key Terms
- CFPB
- Mortgage servicing
- Deregulation
- COVID-19
- Regulation X
- Comment period
- 2024 proposed rule
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