In a comment letter to the Consumer Financial Protection Bureau yesterday, the American Bankers Association supported a recent interim final rule granting 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. ABA noted that the rule “provides an effective balance of borrower protections and servicer flexibility, which will benefit both consumers and industry considerably.”
Under the interim final rule—which took effect July 1—the CFPB is temporarily allowing 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.
In its comment letter, ABA also recommended several changes to the IFR, including shifting the timeline by which servicers must send an acknowledgement letter to the borrower regarding a loss mitigation application and clarifying the waiver of any fees or charges that were accrued or assessed before the coronavirus pandemic.