MBA, NMSA Ask CFPB to Amend Servicing Rules
The Mortgage Bankers Association and the National Mortgage Servicing Association asked the Consumer Financial Protection Bureau to make several changes to its proposed rulemaking to amend Regulation X servicing rules.
The May 10 letter to Acting CFPB Director Dave Uejio noted while the trade groups are in alignment with other trade associations representing national mortgage servicing interest, MBA and NMSA seek several variations in the final rule, including:
• Inclusion of clear exemptions to the special pre-foreclosure review period to prevent the harm the Proposed Rule seeks to address;
• Clarification of the scope of the streamlined modification exemption to reduce hurdles for borrowers; and
• Streamlining of the proposed early intervention requirements to assure efficient and effective communication with borrowers.
“[These recommendations] will strengthen the servicing rules and provide appropriate protection for those borrowers who need it the most, reduce the risk of borrower confusion and frustration and are appropriately limited in scope so that servicer resources can focus on sustainable consumers outcomes and not on implementation of the final rule,” the letter said.
The letter noted since the outset of the pandemic, mortgage servicers have worked tirelessly to offer robust support programs for homeowners affected by the COVID-19 pandemic. “The mortgage servicing industry moved its workforce to remote work almost overnight, increased capacity by hiring new and reallocating existing staff and created additional portals and functionality for web platforms and mobile applications in order to quickly respond to record numbers of customer inquiries,” it said. “In the first 10 weeks of the pandemic servicers processed approximately 4.3 million forbearances. Incredibly, while total CFPB complaints were up 54% year over year from 2019 to 2020, mortgage servicing complaints actually dropped.”
The letter offers several specific recommendations, including:
–The foreclosure moratorium should include clear exceptions to prevent the harm the proposed rule seeks to address. These exemptions should include unresponsive borrowers; borrowers who have been evaluated for all available loss mitigation options on the basis of a complete loss mitigation application and have been deemed ineligible, have declined the proposed loss mitigation option, or have failed to perform on the selected loss mitigation option, including those that took place prior to the effective date of this rule; borrowers who consent to foreclosures; and foreclosures associated with commercial real estate transactions in which the principal residences was taken as additional collateral.
–Failure to augment and clarify the scope of the streamlined modification exemption will frustrate the Bureau’s goal of reducing hurdles for borrowers to enter into permanent loan modifications. MBA and NMSA said to increase utility of the streamlined modification exemption, the Bureau should ease constraints on the proposed modification exemption that could limit its availability.
–The proposed early intervention requirements may result in more borrower confusion while adding unnecessary regulatory burdens. MBA and NMSA said while they support the objectives of the Bureau’s early intervention proposal, they are concerned that, as proposed, the requirements could create borrower confusion or frustration.
–The existing “reasonable diligence” requirements with respect to contacting borrowers nearing the end of their forbearance period offers borrowers sufficient protections while reserving for servicers flexibility to engage in outreach that is most helpful to those borrowers.