The Consumer Financial Protection Bureau (CFPB) and the Conference of State Bank Supervisors (CSBS) recently published a joint statement process mortgage waivers under the CARES law. It appears that the conduct of members of the mortgage industry regarding forbearances will be a top priority for CFPB and state banking regulators during reviews or otherwise.
In the statement, the CFPB and CSBS first summarize the forbearance provisions of the CARES Act and provide links to the guidance they and other agencies have issued. They then discuss the legality of certain specific actions.
Abstention period of less than 180 days. The CARES law provides for an initial forbearance period of up to 180 days if a borrower requests forbearance and claims financial hardship due, directly or indirectly, to the COVID-19 emergency. In the joint statement, the CFPB and the CSBS designate the required statement as an attestation. The CFPB and CSBS indicate that agents can grant a forbearance period of less than 180 days at the request of the borrower or with his consent. The service agents must by default respect the forbearance period requested by the borrower, not exceeding 180 days, if the service agent and the borrower cannot agree on a term or if communication with the applicant borrower is not possible. If the borrower agrees to an initial forbearance period of less than 180 days, the serving agent must extend the term unless the borrower agrees not to extend, and no further proof of financial hardship may be required. . The CFPB and CSBS also warn as follows when a servicer implements a forbearance period of less than 180 days with the consent of the borrower: “[T]The board of directors and the management of the duty officer must provide the additional resources necessary to maintain forbearance as required by the CARES Act. In order to listen to borrowers and ensure compliance with the law, management needs to assess its ability to function adequately under shorter progressive hold-off periods, including additional systems or human resources required. “
No information or proof of the borrower. CFPB and CSBS confirm that a provider cannot require any information from a borrower in support of the forbearance request, and that borrowers do not need to prove proof. However, a service agent can work with a borrower to better understand his or her situation provided that “(i) borrowers are not misled about the requirements of, or deterred from proceeding, withholding from the CARES Act if they have difficulties related to COVID and (ii) any information obtained from the borrower has no bearing on the provider’s provision of forbearance from the CARES law. Although not mentioned in the joint statement, Fannie Mae and Freddie mac have developed scripts to discuss forbearance options with borrowers.
Borrower entitled to abstention. For a borrower who qualifies for a forbearance under the CARES law, the CFPB and CSBS make it clear that a service agent cannot determine that a borrower does not need a forbearance or limit the amount. of the forbearance which is granted, whatever the delinquency status of the borrower.
No direction of borrowers far from abstention. The CFPB and CSBS note that certain services prevent borrowers from requesting forbearance and state the following: “The CARES law states that forbearance must be granted at the request of a borrower attesting to it. Reviewers will assess communications between borrowers and their agents, including the agent’s communication of repayment options for legal compliance or resulting harm to the consumer. A provider who offers very limited reimbursement options when others are reasonably available could[,] depending on the facts and circumstances, risk a violation of the law or cause harm to the consumer.
No discouragement for borrowers to request forbearance. Finally, the CFPB and CSBS discuss the use of loan closing certificates which are designed to discourage borrowers who subsequently experience COVID-19 difficulties from requesting forbearance: A principal who induces a A borrower in error regarding his rights under the CARES law could, depending on the facts and circumstances, be at risk of committing a violation of the law or of causing harm to the consumer.