September 23, 2021

Volume XI, Number 266

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CFPB Releases COVID-19 Mortgage Servicing Final Rule

On June 28 2021, the Consumer Financial Protection Bureau released its much-anticipated mortgage servicing final rule related to COVID-19. This rulemaking amends Regulation X and, as expected, largely tracks the proposal that the Bureau issued in early April 2021 and that we wrote about shortly thereafter. The new rules will become effective on August 31, 2021, leaving mortgage servicers a very short amount of time — 64 calendar days to be exact — to digest and implement the new requirements and prohibitions.

Like the April 2021 proposal, the Bureau’s final rule contains four main components:

  • Moratorium on new foreclosure actions through December 31, 2021;

  • Exception to the anti-evasion clause for certain COVID-19 modification options;

  • New early intervention communication requirements; and

  • Clarification on the reasonable diligence standard for borrowers in forbearance.

In general, the aspects of the Bureau’s proposed rule that seemed to garner the most attention and comments from mortgage servicers and trade associations were the foreclosure moratorium and the early intervention contact requirements. Thankfully, the Bureau did react to some of the industry’s concerns. For example, rather than institute a blanket prohibition on new foreclosure actions, the Bureau adopted certain limited exceptions to the general rule, including for nonresponsive borrowers, borrowers who have gone through a complete loss mitigation evaluation, and abandoned properties. As compared to the proposed rule, important changes were also made to the anti-evasion clause exception that will apply to certain loan modifications. Similarly, the Bureau modified the early intervention requirements in response to concerns surrounding the timing for borrowers in forbearance. Rather than tie certain requirements to the “last live contact,” the Bureau reacted to industry feedback that the language was problematic and refined the law so that the contact generally must be made between 10-45 days before the end of most forbearance plans.

© 2021 Bradley Arant Boult Cummings LLPNational Law Review, Volume XI, Number 179
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About this Author

Jason R. Bushby Attorney Bradley Arant Boult Cummings Birmingham
Partner

Jason Bushby provides regulatory compliance, examination, enforcement, and litigation assistance to a range of financial services clients across the country.

On the compliance side, Jason assists financial services entities as they seek to ensure their operations are compliant with applicable federal and state consumer financial laws. Jason is knowledgeable on the mortgage origination and servicing regulations issued by the Consumer Financial Protection Bureau (CFPB), including the Mortgage Servicing Final Rules in Regulations X and Z and the...

205-521-8086
Jonathan Kolodziej Attorney Bradley Arant Boult Cummings Birmingham
Partner

Jonathan Kolodziej represents all types of consumer financial service providers in regulatory compliance, examination and enforcement matters. Through this work, he has assisted bank and non-bank mortgage servicers, mortgage originators, debt collectors, depository institutions, credit card issuers, small dollar lenders, reverse mortgage companies, investment firms, and various industry trade associations.

Jonathan’s regulatory compliance practice centers around helping clients ensure that their operations are in compliance with applicable...

205-521-8235
Gregory Pipes Attorney Litigation Bradley Arant Boult Cummings Birmingham
Associate

Greg Pipes assists banks, mortgage originators and servers, and other financial service providers with examinations, investigations, and enforcement actions initiated by the Consumer Financial Protection Bureau (CFPB) and other federal and state regulators. His practice focuses on helping clients navigate all aspects of the regulatory examination and enforcement process. Greg also helps clients assess the impact of new rules and regulations and adapt to changes in the regulatory environment.

205-521-8763
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