In a joint statement, the Federal Reserve, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency, and state financial regulators announced they will resume supervision and enforcement actions under Regulation X mortgage servicing rules.
This statement replaces the one made in April 2020, where the same agencies suspended actions against mortgage servicers for failing to meet certain timing requirements.
“More than 18 months have passed since issuance of the April 2020 joint statement,” the agencies stated. “While the COVID-19 pandemic continues to affect consumers and mortgage servicers, the agencies believe the temporary flexibility described in the April 2020 joint statement is no longer necessary because servicers have had sufficient time to adjust their operations by, among other things, taking steps to work with consumers affected by the COVID-19 pandemic and developing more robust business continuity and remote work capabilities.
“Accordingly, the temporary supervisory and enforcement flexibility announced in the April 2020 joint statement no longer applies and the agencies will apply their respective supervisory and enforcement authorities, where appropriate, to address any noncompliance or violations of the Regulation X mortgage servicing rules that occur after the date of issuance of this statement.”
The agencies also said they recognized the ongoing challenges faces by mortgage servicers and their efforts to assist customers and members affected by the ongoing pandemic. They encouraged mortgage servicers to continue in these efforts, and assured they would consider, when appropriate, the specific impact of servicers’ COVID-19 challenges and take those issues into account when considering any supervisory and enforcement actions. The agencies also will factor in the time it takes to make operational adjustments considering this most recent joint statement.
“Failures by mortgage servicers and regulators worsened the impact of the economic crisis a decade ago,” CFPB Director Rohit Chopra said in a release. “Regulators have learned their lesson, and we will be scrutinizing servicers to ensure they are doing all they can to help homeowners and follow the law.”
In conjunction with the joint statement, the CFPB also released a report on mortgage servicing efforts in response to the COVID-19 pandemic. In the report, the bureau discusses:
- Conducting prioritized assessments, or targeted supervisory reviews, designed to obtain real-time information from mortgage services due to the elevated risk of consumer harm because of the pandemic.
- Reminding servicers that “unprepared is unacceptable,” and that servicers need to dedicate enough resources and staff to ensure they can communicate clearly with homeowners, effectively assist borrowers, and reduce avoidable foreclosures during the surge in forbearance exits this fall.
- Implementing temporary procedural safeguards to help ensure that borrowers have time before foreclosure to explore their options, including loan modifications and selling their homes.
- Analyzing consumer complaint data about mortgage servicing and mortgage forbearances.
- Conducting additional, targeted review of high-risk complaints related to COVID-19 forbearance.
- Analyzing and publishing mortgage servicers’ COVID-19 pandemic response.
- Conducting original research documenting that Black and Hispanic communities, and low-income communities across racial and ethnic groups are at increased risk of another foreclosure crisis due to the disproportionate concentration of mortgage forbearances and delinquencies in those communities.
- Creating an online housing hub website in partnership with other federal agencies, to connect homeowners, renters and landlords with information about CARES Act assistance and protections.
- Creating and distributing homeowner outreach materials, in English and other languages, that servicers and housing counselors can use to help homeowners affected by the COVID-19 pandemic.
- The CFPB will continue to monitor closely the performance of mortgage servicers to prevent avoidable foreclosures to the maximum extent possible and will not hesitate to take supervisory or enforcement action if warranted.