(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.)
LINK:
(Sept. 17, 2021) Existing laws and regulations provide credit unions, banks and other supervised entities regulatory flexibility to take certain actions that can benefit consumers in communities under stress from disasters or emergencies and hasten recovery, CFPB said in policy guidance issued this week.
In a “statement on supervisory practices regarding financial institutions and consumers affected by a major disaster or emergency,” the bureau said it would consider the impact of major disasters or emergencies on supervised entities themselves when conducting supervisory activities.
“Supervised entities can make use of existing regulatory flexibility where doing so would benefit consumers affected by a major disaster or emergency,” the bureau wrote in the statement.
The statement offers examples of flexibility under Regulations B (implementing the Equal Credit Opportunity Act, ECOA), X (Real Estate Settlement Procedures Act, RESPA), and Z (Truth in Lending Act, TILA).
On supervisory response, the CFPB said it recognizes that supervised entities “may themselves experience difficulties due to a major disaster or emergency.” The bureau said that, when conducting exams or other supervisory activities, it would consider the circumstances institutions may face following a major disaster or emergency “and will be sensitive to good-faith efforts to assist consumers.”
Separately this week, NCUA joined with the federal banking agencies in issuing an interagency statement on supervisory practices regarding credit unions and banks affected by Hurricane Ida. The statement, relatively routine for the agencies in the wake of a storm or other natural disaster, noted regulators “recognize the serious impact of Hurricane Ida on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.”
LINK:
(June 4, 2021) Frequently asked questions (FAQs) about mortgage servicing were updated this week by the CFPB, concerning escrow account compliance under Regulations X and Z (RESPA and TILA, respectively). The new questions added 11 pages to the agency’s mortgage servicing queries list, covering an array of issues related to escrow accounts (including: a basic definition) … Written communication providing specific direction on use of alternative data at financial institutions – including credit unions — is required from regulators, the GAO indicated in reports it issued this week. Additionally, the GAO wrote, regulators should be collaborating on the specifics in that written communication. The GAO detailed an outstanding 2018 recommendation that has not yet been addressed by the Fed and the FDIC, asserting that “continued attention to this issue could improve (the agencies’) ability to more effectively oversee risks to consumers and the safety and soundness of the U.S. banking system.” The GAO did note that federal financial regulators (including NCUA) in late 2019 issued an interagency statement highlighting potential benefits and risks of using alternative data and encouraged financial firms to use it. However, GAO noted, that statement does not provide firms or banks with specific direction on the appropriate use of that data, including issues to consider when selecting types of alternative data to use.
LINKS:
Mortgage Servicing FAQs, last updated June 2, 2021.
Priority Open Recommendations: Federal Deposit Insurance Corporation