HUD, CFPB Issue Updated Coronavirus Guidance
HUD and the Consumer Financial Protection Bureau yesterday issued updated information for lenders, borrowers and credit reporting companies as the coronavirus pandemic intensifies.
HUD issued a Mortgagee Letter (https://www.hud.gov/sites/dfiles/OCHCO/documents/20-06hsngml.pdf) providing a tailored set of mortgage payment relief options for single family homeowners with FHA-insured mortgages who are experiencing financial hardship as a result of the crisis.
The CFPB issued a policy statement (https://files.consumerfinance.gov/f/documents/cfpb_credit-reporting-policy-statement_cares-act_2020-04.pdf) clarifying responsibilities of credit reporting companies and furnishers during the COVID-19 pandemic.
HUD said effective immediately for borrowers with a financial hardship that makes them unable to pay their mortgage, mortgage servicers must provide forbearance for up to six months, and must provide an additional six months of forbearance if requested by the borrower. This mandate implements provisions contained in the landmark Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which President Trump signed into law on March 27.
“The last thing any of us wants is for Americans to lose their homes unnecessarily while we continue to fight this invisible enemy. If you’re struggling, immediate help is now available,” said HUD Secretary Ben Carson. “FHA will continue to work with stakeholders to ensure that the loss mitigation options that are offered for both forward and reverse borrowers are appropriately tailored for the present situation.”
In addition to special COVID-19 forbearance, FHA also implemented the COVID-19 National Emergency Partial Claim, an option to be used by servicers when the COVID-19 forbearance period ends. This partial claim will help eligible homeowners who have been granted special COVID-19 National Emergency forbearance to reinstate their loans by authorizing servicers to advance funds on behalf of homeowners. The partial claim will defer the repayment of those advances through an interest-free subordinate mortgage that the borrower does not have to pay off until their first mortgage is paid off.
Additionally, FHA instructed mortgage servicers to delay submitting Due and Payable requests for Home Equity Conversion Mortgages by six months, with an additional six-month delay available with HUD approval; and extend any flexibility they may have under the Fair Credit Reporting Act relative to negative credit reporting actions.
FHA also published a Q&A for consumers at https://www.hud.gov/sites/dfiles/SFH/documents/COVID-19HomeownerHelp.pdf.
Meanwhile, the CFPB yesterday said its policy statement provides clarity in responsibilities of credit reporting companies and furnishers during the pandemic.
“The Bureau…recognizes the serious impact the COVID-19 pandemic is having on the financial well-being of many consumers and on the operations of many supervised entities, including actors in the consumer reporting system, and the challenges of this unique and rapidly evolving situation,” the statement said. “Consumer reporting has enormous reach, as evidenced by the over 200 million consumers in the United States who have credit files and trade lines furnished by over 10,000 providers. The continued operation of the consumer reporting system will play a critical role in the functioning of the consumer financial services market, promoting fair and efficient access to credit and benefiting consumers and creditors alike.”
The statement noted the Bureau “understands that the current crisis impacts the financial well-being of consumers and poses operational challenges for consumer reporting agencies and furnishers, including staffing challenges, that could temporarily impede their ability to timely comply with their statutory and regulatory consumer reporting obligations.” The statement highlights furnishers’ responsibilities under the recently passed CARES Act and inform consumer reporting agencies and furnishers of the Bureau’s flexible supervisory and enforcement approach during this pandemic regarding compliance with the Fair Credit Reporting Act and Regulation V.
CFPB Director Kathy Kraninger said the Bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.
“Consumers rely on their credit report to purchase a new car, their new home, or to finance their college education,” Kraninger said. “An effective consumer reporting system is critical in promoting fair and efficient access to credit in the consumer financial services market.”
Kraninger said continuation of reporting such accurate payment information produces substantial benefits for consumers, users of consumer reports and the economy as a whole.
The Bureau statement also provides flexibility for lenders and credit bureaus in the time they take to investigate disputes. The Bureau specifically states that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes “as long as they make good faith efforts during the pandemic to do so as quickly as possible.”
“The Bureau intends to consider the circumstances that entities face as a result of the COVID-19 pandemic and entities’ good faith efforts to comply with their statutory and regulatory obligations as soon as possible,” the statement said. “The Bureau believes that this flexibility will help furnishers and consumer reporting agencies to manage the challenges the current crisis poses. It also will enable consumers, as well as lenders, consumerfinance.gov insurers, employers and other consumer report users, to maintain confidence in the consumer reporting system.