On 9/30/2021, the CFPB published an article reminding servicers of newer rule that help protect potentially vulnerable borrowers exiting forbearance. In their article, the CFPB reminds loan services that not all borrowers are similarly situated and many borrowers may be vulnerable to a greater risk of harm due to a variety of pandemic-related and nonrelated circumstances, including poor health, mental decline, disability, caregiving for a child or loved one, having limited English proficiency, inadequate access to technology, or being a first-time homeowner.
The article reminds servicers that the CFPB’s final rule amending Regulation X to assist mortgage borrowers affected by the COVID-19 emergency became effective on August 31. This final rule establishes temporary procedural safeguards to help ensure that eligible borrowers have a meaningful opportunity to be reviewed for loss mitigation before the servicer can make the first notice or filing required for foreclosure on certain mortgages.
The article also reminds servicers that the CFPB also issued a Compliance Bulletin on April 1, 2021 which explained that, consistent with the flexibilities announced in the April 3, 2020 joint statement, the CFPB expected servicers to manage communications with limited English proficiency borrowers while maintaining compliance with applicable laws and to maintain policies and procedures that are reasonably designed to achieve the continuity of contact objectives to ensure that delinquent borrowers receive accurate information about their loss mitigation options.
The CFPB article also encourages servicers to enhance their communication capabilities and outreach efforts to educate and assist all borrowers in resolving delinquency and enrolling in widely available assistance and loss mitigation options. The CFPB article also encourages servicers to ensure that their compliance management systems include robust measures to identify and mitigate fair lending risk.
The full CFPB article can be found here.
The CFPB final rule amending Reg X can be found here.