ABA Calls for Changes to CFPB Proposal to Assist Mortgage Borrowers Affected by COVID-19

The American Bankers Association yesterday offered several changes to a recent proposal by the Consumer Financial Protection Bureau to facilitate streamlined loan modification efforts and establish a temporary COVID-19 emergency pre-foreclosure period under Regulation X that would prohibit servicers from making the first notice or filing required to initiate foreclosure until Dec. 31. This “pre-foreclosure” period would apply to mortgage loans secured by the borrower’s principal residence.

ABA noted that there is broad consensus among several financial trade associations on core requests related to the rulemaking. Specifically, the CFPB should: include clear exceptions to the moratorium provisions to prevent the harm the proposed rule seeks to address; augment and clarify the scope of the streamlined modification exemption to reduce hurdles for borrowers; and streamline the proposed early intervention requirements to assure efficiencies.

These recommendations will help to “ensure that the servicing rules provide appropriate protection for those borrowers who need it the most, reduce the risk of borrower confusion and frustration, and are appropriately limited in scope so that servicer resources can be dedicated to working with consumers—not on implementing the final rule,” ABA said in its comment letter.