CFPB Announces Final Mortgage Servicing Rule to Help Borrowers Affected by the COVID-19 Pandemic Avoid Foreclosure
In anticipation of the expiration of federal COVID-19 pandemic foreclosure protections, the Consumer Financial Protection Bureau has issued a final rule amending its federal mortgage servicing regulations. Among other changes, effective from August 31, 2021 through December 31, 2021, a borrower must be given an opportunity by the mortgage servicer to explore all available loss mitigation options before a foreclosure proceeding can be commenced on a borrower's principal residence. The final rule also gives servicers greater flexibility to offer borrowers COVID-19-related streamlined loan modifications, creates new, temporary early intervention requirements for live contact, and clarifies how to exercise reasonable diligence with respect to incomplete loss mitigation applications related to COVID-19.
The new rule will not preclude commencement of foreclosures prior to January 1, 2022 if:
- The mortgage servicer has satisfied the loss mitigation procedures outlined in the rule;
- The borrower has been unresponsive to servicer outreach for more than 90 days;
- The property is abandoned;
- The borrower was more than 120 days delinquent prior to March 1, 2020; or
- Where the applicable statute of limitations will expire before January 1, 2022.
Read the Final Rule
Read the Executive Summary of the Final Rule
Stay tuned for additional implementation guidance from our Financial Services team.