Mortgage servicer ‘flexibility’ ceased

(Nov. 19, 2021) A flexible approach is ended for supervision and enforcement of certain mortgage servicing timing requirements initiated in spring, 2020, NCUA, federal and state banking and credit union agencies and the CFPB said late last week in a joint statement.

The regulators issued the statement that the flexibility, declared as the financial impact coronavirus crisis first ramped up in April 2020, is no longer necessary given the amount of time servicers have had to adjust processes to accommodate the demands arising due to the pandemic.

Under the declaration made a year-and-a-half ago, the agencies said that they would not take supervisory or enforcement action against mortgage servicers for delays in sending certain early intervention and loss mitigation notices and taking certain actions relating to loss mitigation set out in the mortgage servicing rules, provided that servicers were making good faith efforts to provide these notices and take these actions within a reasonable time. The regulators said then that that stance would continue “until further notice.”

“More than 18 months have passed since issuance of the April 2020 Joint Statement,” the agencies said last week. “While the COVID-19 pandemic continues to affect consumers and mortgage servicers, the agencies believe the temporary flexibility described in the April 2020 Joint Statement is no longer necessary because servicers have had sufficient time to adjust their operations by, among other things, taking steps to work with consumers affected by the COVID-19 pandemic and developing more robust business continuity and remote work capabilities.”

With the temporary flexibility at an end, the agencies said they “will apply their respective supervisory and enforcement authorities, where appropriate, to address any noncompliance or violations of the Regulation X mortgage servicing rules that occur after the date of issuance of this statement,” they stated. (Regulation X implements provisions of the Real Estate Settlement Procedures Act, or RESPA.)


Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the Continuing COVID-19 Pandemic and CARES Act