CFPB Grants Flexibility to Servicers Offering Forbearance Options to Borrowers

The Consumer Financial Protection Bureau today granted flexibility under Regulation X for servicers to offer deferral options to borrowers as they transition from forbearances for financial hardships due to the coronavirus pandemic. In an interim final rule issued today, the bureau said it would temporarily permit servicers to offer certain deferral options for forborne payments based on an evaluation of an incomplete loss mitigation application.

Among other things, such loss mitigation options must permit borrowers to defer forborne payments—including principal, and interest—until the loan is refinanced, the mortgaged property is sold, the term of the loan ends or, for FHA-insured mortgages, the mortgage insurance terminates, the CFPB said. The interim final rule takes effect July 1. Comments will be accepted for 45 days after publication in the Federal Register.