Summer 2021 Federal Highlights

CFPB Delays Mandatory Compliance Date of General QM Final Rule

The CFPB proposed a rule delaying the mandatory compliance date of the General Qualified Mortgage (“QM”) Final Rule issued in December 2020. On April 28, 2021, the CFPB formally delayed the mandatory compliance date of the Rule from July 1, 2021 to October 1, 2022.

Senate Bill 475 – Juneteenth is a Legal Public Holiday

On June 17, 2021, the President signed into law Senate Bill 475 creating Juneteenth National Independence Day.

Under TILA and Regulation Z, a “business day” is a “day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.” However, for specific purposes, such as the right of recission and the waiting periods prior to consummation under the TRID disclosure rules, a business day is “all calendar days except Sundays and legal public holidays specified in 5 U.S.C. 6103(a).”

The Bill amends 5 U.S.C. 6103(a) to add “Juneteenth National Independence Day, June 19.” Therefore, Saturday June 19, is now a legal public holiday for purposes such as the right of recission and the waiting periods prior to consummation under the TRID disclosure rules.

CFPB Finalizes Amendments to Mortgage Servicing Rules

On June 28, 2021, the CFPB issued a final rule amending Regulation X, the “2021 Mortgage Servicing COVID-19 Rule.” These amendments require mortgage servicers to provide additional assistance to borrowers experiencing a COVID-19-related hardship. Specifically, a mortgage servicer must meet temporary special procedural safeguards before initiating foreclosure for mortgage loans secured by a borrower’s principal residence. The amendments are effective August 31, 2021, but vary in their length of effectiveness as indicated below.

Definition of COVID-19-Related Hardship

The rule creates and defines the term “COVID-19-related hardship,” which means “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic declared in Proclamation 9994 on March 13, 2020 (beginning on March 1, 2020) and continued on
February 24, 2021, in accordance with section 202(d) of the National Emergencies Act
(50 U.S.C. 1622(d)).”

Loss Mitigation COVID-19 Procedural Safeguards

The final rule establishes a temporary procedural safeguard against foreclosure. From August 31, 2021 through December 31, 2021, the servicer must ensure that at least one of the following temporary procedural safeguards has been met before making the first notice or filing for foreclosure. The temporary procedural safeguards are not required if: (1) foreclosure referral occurs on or after January 1, 2022; (2) the borrower was more than 120 days delinquent prior to March 1, 2020; or (3) the applicable statute of limitations will expire before January 1, 2022.

Streamlined Loan Modification Options

Servicers are permitted to offer certain streamlined loan modification options related to hardships based on the evaluation of an incomplete loss mitigation application. The offering of a loan modification here is not considered a loan modification based on a complete loss mitigation application, and therefore if the borrower subsequently becomes delinquent the servicer must resume reasonable diligence efforts.

Reasonable Diligence Obligations

The rule updates a servicer’s reasonable diligence obligations when a borrower is in a short-term payment forbearance program made available due to a COVID-19-related hardship based on the evaluation of an incomplete application. A servicer is required to contact the borrower no later than 30 days before the forbearance period ends if the borrower remains delinquent to determine if the borrower wishes to complete the loss mitigation application and full evaluation. If the borrower does, the servicer must exercise reasonable diligence to complete the application before the end of the forbearance program.

Early Intervention Obligations

Under Section 1024.39(a), a servicer is required to make good faith efforts to establish live contact with delinquent borrowers no later than the borrower’s 36th day of delinquency and again no later than 36 days after each payment due date so long as the borrower remains delinquent. Once established, the servicer must inform the borrower of loss mitigation options when appropriate.

The updates require a servicer who has established live contact to provide additional COVID-19-related information to a borrower in two circumstances: (1) if the borrower is not in a forbearance program; and (2) if the borrower is near the end of a forbearance program made available to a borrower experiencing a COVID-19-related hardship. These specific requirements are effective until October 1, 2022.

Posted in Federal Highlights, Newsletters


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