On July 8, the Federal Housing Administration (FHA) announced an expanded array of loss-mitigation tools available to mortgage servicers. These measures require servicers to assess homeowners for multiple loan-modification options before the end of their forbearance period. These new measures are intended to assist homeowners financially impacted by the COVID-19 pandemic. Release.
On June 23, the Consumer Financial Protection Bureau (CFPB) issued an interim final rule that amends Regulation X by temporarily permitting mortgage servicers to offer certain loss mitigation options to borrowers impacted by the COVID-19 pandemic without first obtaining a completed loss mitigation application from the borrower. Release. Interim Final Rule.
On November 20, the FHA announced changes to its loss mitigation program which will allow more distressed borrowers to qualify for FHA loss mitigation interventions and to get greater assistance. Included among the changes are: (i) streamlining the FHA’s Loss Mitigation Home Retention Option to a 3-tier incentive structure; (ii) redefining “Special Forbearance”; (iii) eliminating some requirements which limited lenders’ ability to provide borrowers with assistance; and (iv) expanding HAMP. FHFA Release.
On January 19, FDIC Chairman Bair spoke at the Summit on Residential Mortgage Servicing for the 21st Century where she discussed, among other things: (i) establishing a fixed formula to govern treatment of first and second mortgages when the servicer owns the second mortgage, (ii) requiring banks to foreclose in their own names instead of allowing MERS to foreclose, (iii) establishing a foreclosure claims commission to be funded by servicers to address homeowner complaints from foreclosures with servicing errors, (iv) establishing incentives for loss mitigation in servicing, and (v) possible features of a definition for “qualified residential mortgages” which are exempt from risk retention requirements under the Dodd-Frank Act. FDIC Release.
