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CFPB releases video to explain mortgage forbearance
On April 3, the CFPB announced the release of a video, which seeks to explain mortgage forbearance provided pursuant to the CARES Act. The announcement provides links to additional resources for consumers experiencing financial hardship due to the Covid-19 pandemic. In addition to the video, the resources include (i) mortgage relief, covered by InfoBytes here; (ii) student loans, covered by InfoBytes here; (iii) warning about scams; and (iv) “[o]nline and mobile banking tips for beginners.” Also on April 3, the Bureau updated guidance entitled Protect yourself financially from the impact of the coronavirus.
CFPB issues guidance for Covid-19 mortgage relief options
On March 31, the CFPB released guidance for consumers who have been negatively impacted by the Covid-19 pandemic and may have difficulty making mortgage or rent payments. Pursuant to the recently passed CARES Act, for homeowners with federally backed mortgages, no foreclosures may be initiated for 60 days beginning on March 18, and homeowners financially impacted by Covid-19 have the right to a forbearance of up to 180 days. The guidance lays out mortgage relief options as well as the process for homeowners to determine the programs for which they qualify. According to the guidance, the CARES Act also protects renters by suspending evictions for 120 days beginning on March 27 if the landlord has a federally backed mortgage. The guidance notes that even if the landlord does not have a federally backed mortgage, most states have also suspended evictions during the pandemic. The guidance also includes information on how homeowners can request mortgage relief from their servicers, including sample questions and other tips. Further, the guidance cautions homeowners to carefully monitor their mortgage statements and credit reports and describes how to avoid scams.
Illinois Department of Financial and Professional Regulation issues guidance to mortgage servicers
On March 30, the Illinois Department of Financial Regulation, Division of Banking and Division of Financial Institutions (Department), issued guidance to Illinois-licensed mortgage servicers and exempt mortgage servicers urging support for borrowers impacted by Covid-19. The Department urges all servicers of nonconforming and private mortgages to implement policies at least as helpful to borrowers as those offered for conforming loans, including, among others: (i) forbearing mortgage payments for at least 90 days without incurring additional interest or fees; (ii) refraining from reporting late payments to credit rating agencies and, when payments are deferred or modified, coding those payments as deferred with the applicable disaster order; (iii) offering loss mitigation options to borrowers; and (iv) waiving late payment fees and online payments fees; and (v) postponing foreclosures and evictions for at least 90 days. Prudent actions taken during this period will be considered to be consistent with safe and sound banking practices and will not be subject to examiner criticism.
Federal student loan payments suspended, interest waived during Covid-19 national emergency
On March 20, U.S. Secretary of Education Betsy DeVos announced temporary relief for student loan borrowers in response to the Covid-19 national emergency. The borrower relief measures include:
- Automatic 0% interest rates on all federally held student loans for at least 60 days;
- Option to suspend payments for at least two months;
- Administrative forbearance on any federally held loan by all federal student loan servicers at the request of the borrower, for at least 60 days, beginning on March 13;
- Automatic payment suspension for any borrower who is “more than 31 days delinquent as of March 13, or who becomes more than 31 days delinquent”; and
- The entire loan “payment will be applied to the principal” loan amount “once all interest accrued prior to the president's March 13 announcement is paid” for all borrowers who wish to continue making payments on their loans.
Additional information may be found at StudentAid.gov/coronavirus.
Mortgage sellers, servicers reminded of relief options for borrowers impacted by Covid-19
On March 10, Federal Housing Finance Agency Director Mark Calabria released a statement reminding mortgage servicers that borrowers impacted by Covid-19 and experiencing payment hardship would be eligible for hardship forbearance options set forth in the relevant Fannie Mae and Freddie Mac servicing guidelines. Calabria directed sellers and servicers to guidance issued the same day by Freddie Mac, which also reminds sellers and servicers that business continuity plans must be in place in order to conduct business operations in the event of an interruption. Fannie Mae has provided similar guidance to its seller/servicers.
Separately, on March 9, the Federal Housing Administration (FHA) issued a notice to all FHA-approved mortgagees and servicers reminding entities of loss mitigation program options that should be offered to distressed borrowers, including those impacted by Covid-19, to prevent foreclosures. These options, FHA noted, are available in the Single Family Housing Policy Handbook, 4000.1 Section III.A.2.
Agencies issue guidance to institutions affected by storms in Gulf Coast and Hurricane Lane in Hawaii
On September 5, the OCC issued a proclamation permitting OCC-regulated institutions to close their offices affected by Tropical Storm Gordon in the Gulf Coast Region. OCC Bulletin 2012-28 provides further guidance on natural disasters and other emergency conditions.
On August 30, the Department of Veterans Affairs issued Circular 26-18-17, requesting relief for homeowners impacted by Hurricane Lane in Hawaii. Among other things, the Circular (i) encourages loan holders to extend forbearance to borrowers in distress because of the storms; (ii) requests that loan holders establish a 90-day moratorium on initiating new foreclosures on loans affected by the major disaster; and (iii) waives late charges on affected loans. The Circular is effective until October 1, 2019.
Find continuing InfoBytes coverage on disaster relief here.