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Student loan servicer agrees to produce requested records
On September 28, the Colorado attorney general announced that a Pennsylvania-based student loan servicer responsible for handling the federal Public Service Loan Forgiveness (PSLF) program has agreed to comply with a state law requiring consumer protection oversight. As previously covered by InfoBytes, the AG sued the servicer in May for allegedly failing to comply with state law when asked to provide certain documentation related to the servicer’s handling of the PSLF program during the Covid-19 pandemic. The servicer allegedly refused to produce the requested materials and only provided certain limited documents regarding non-government owned loans related to its business line. Under the terms of the assurance of discontinuance, the servicer (while denying any liability) has agreed to produce the requested records in compliance with the Colorado Student Loan Equity Act.
OCC reports improved mortgage performance
On September 28, the OCC reported that 95 percent of first-lien mortgages were current and performing at the end of the second quarter of 2021—an increase from 91.1 percent at the end of the second quarter of 2020 (the first full quarter of the Covid-19 pandemic). According to the report, seriously delinquent mortgages declined from 4.6 percent in the prior quarter (6.8 percent a year ago) to 3.8 percent. During the second quarter of 2021, servicers initiated 592 new foreclosures—a 28.9 percent decrease from the prior quarter but a 137.8 percent increase from a year ago. The OCC noted that events related to the pandemic, such as foreclosure moratoriums, “significantly affected these metrics.” Additionally, mortgage modifications decreased 17.1 percent from the prior quarter. Of the reported 39,599 mortgage modifications, 53.3 percent reduced borrowers’ pre-modification monthly payments, while 97.2 percent were “combination modifications” that “included multiple actions affecting affordability and sustainability of the loan, such as an interest rate reduction and a term extension.”
HUD issues mortgagee letter on Covid-19 forbearance
On September 27, HUD issued Mortgagee Letter 2021-24, which extends and adds Covid-19 relief options for borrowers who are struggling with mortgage payments due to the pandemic and for senior homeowners with Home Equity Conversion Mortgages (HECM) who require assistance to stay in their homes. According to HUD, these actions are in response to the impact of the pandemic and “are part of FHA’s continuing evolution of its COVID-19 policies so that the right tools are in place to help borrowers.” FHA is now providing: (i) “up to six months of COVID-19 Forbearance for borrowers requesting an initial COVID-19 Forbearance or HECM Extension from their mortgage servicer between October 1, 2021, and the end of the COVID-19 National Emergency, and an additional six months if the COVID-19 Forbearance or HECM Extension is exhausted and expires before the end of the COVID-19 National Emergency”; and (ii) “up to six months of additional forbearance for borrowers who requested or will request an initial COVID-19 Forbearance or HECM Extension from their mortgage servicer between July 1, 2021, and September 30, 2021, allowing these borrowers up to a maximum of 12 months of COVID-19 Forbearance or HECM Extension.”
Pennsylvania adopts mortgage servicing regulations
On September 25, the Pennsylvania Department of Banking and Securities adopted provisions regarding mortgage servicing regulations. Among other things, the regulations clarify the definition of a “COVID-19 related hardship,” establish general disclosure requirements, and provide early intervention and loss mitigation procedures and options. Specifically, the regulations establish that until October 22, 2022, a servicer must, after establishing live contact for borrowers not in forbearance programs, inform them that forbearance programs are available for those experiencing a “COVID-19-related hardship” and must list and describe these forbearance programs and the actions the borrower must take to be evaluated for the programs, among other things. Additionally, for borrowers in forbearance programs at the time of live contact, servicers, until October 22, 2022, must provide the end date of the borrower’s current forbearance program, a list and description of the types of forbearance extensions, and a way that the borrower can find contact information for homeownership counseling services, among other things. The regulations also establish loss mitigation procedures in that a servicer may offer a borrower a loss mitigation option based upon evaluation of an incomplete application, provided that certain criteria are met. In addition, the regulations create certain Covid-19-related loan modification options, such as a loan modification can be made available to borrowers experiencing a Covid-19-related hardship. The regulations are effective immediately.
FHFA extends Covid-19 multifamily forbearance
On September 24, FHFA announced that Fannie Mae and Freddie Mac (GSEs) will continue to offer Covid-19 forbearance to qualified multifamily property owners. The forbearance options for GSE-backed multifamily mortgages were set to expire September 30, but have been extended for the fourth time. Eligible multifamily property owners that enter into new or modified forbearance agreements are required to (i) “[i]nform tenants in writing about tenant protections available during the property owner’s forbearance and repayment periods”; and (ii) “[a]gree not to evict tenants solely for the nonpayment of rent while the property is in forbearance.” Additionally, property owners must also provide a tenant at least 30-days’ notice to vacate, may not charge a tenant late fees or penalties for nonpayment of rent, and must allow a tenant flexibility to repay back rent over time and not in a lump sum.
CFPB highlights post-pandemic risks for renters
On September 17, the CFPB released a report revealing that renters and their families may experience “previously avoided economic harms of the Covid-19 pandemic as federal and state relief programs expire.” The report, which compared homeowners and renters using the CFPB’s Making Ends Meet survey and consumer credit data, found that, “on average, renters’ economic conditions were significantly more responsive to relief measures such as stimulus payments and alterations in unemployment benefits”, and are thus more susceptible to financial hardships as programs are ending. In comparing renters and homeowners, the report found, among other things, that: (i) renters are more likely to be Black or Hispanic, younger, and have lower incomes than homeowners; (ii) renters’ credit scores increased by 16 points during the pandemic, compared to 10 points for mortgagors and 7 points for other homeowners; and (iii) delinquency rates of renters with children experienced a considerable decrease after stimulus payments. According to CFPB acting Director Dave Ujeio, the Bureau “is committed to helping renters and their families thrive,” and “the modest gains renters made during the pandemic to ensure this nation’s full and equitable recovery from COVID-19.”
SBA issues final rule on PPP appeals process
On September 16, the SBA published a final rule in the Federal Register informing Paycheck Protection Program (PPP) borrowers and lenders of the appeal process for certain SBA loan review decisions under the PPP to the SBA Office of Hearings and Appeals. The final rule adopts, with changes, certain portions of an interim final rule published in August 2020 (covered by InfoBytes here). Among other things, the final rule dispenses the 30-day delayed effective date to allow SBA to immediately issue decisions and provide certainty concerning the appeals process to potential appellants without further delay. Because the final rule further “provides increased accessibility to borrowers in response to comments previously received by the public, allowing the borrowers that receive an appealable final SBA loan review decision to immediately appeal under the final rule is in the best interests of the borrowers.” The final rule became effective September 14.
FHA issues presidentially declared major disaster area guidance
On September 10, FHA issued FHA INFO 21-7, which reminds mortgagees originating and/or servicing FHA-insured mortgages in the U.S. and its territories of guidance applicable in the event of a presidentially declared major disaster area (PDMDA) during the Covid-19 pandemic. For PDMDAs issued in connection with Covid-19, mortgagees must continue to follow existing guidance for borrowers already on a Covid-19 loss mitigation or recovery option. For all other borrowers, mortgagees must evaluate borrowers for all loss mitigation options available to them, which includes any applicable “PDMDA or COVID-19 Loss Mitigation Options or COVID-19 Recovery Options,” based on the reason for hardship. In addition, for all “mortgaged properties in areas covered by PDMDA declarations not related to the COVID-19 National Emergency,” FHA provides a number of other reminders to mortgagees, including: (i) FHA-insured forward mortgages secured by properties in a PDMDA are subject to a 90-day foreclosure moratorium after a disaster declaration; (ii) mortgagees should reach out to borrowers who may need loss mitigation assistance as soon as possible following the presidential declaration; and (iii) FHA-insured HECM loans secured by PDMDA properties that are due and payable for reasons other than the death of the last surviving borrower or the end of a deferral period due to the death of an eligible non-borrowing spouse are subject to a 90-day HECM foreclosure timeline extension.
FHA announces temporary partial waivers to HECM policies
On September 2, the FHA announced FHA INFO 2021-70, which issues the following temporary partial waivers to its Home Equity Conversion Mortgage (HECM) policies for those impacted by the Covid-19 pandemic: (i) the temporary partial waiver of Mortgagee Letter 2015-11, which allows mortgagees to offer repayment plans to HECM borrowers with unpaid property charges regardless of their total outstanding arrearage; and (ii) the temporary partial waiver of Mortgagee Letter 2016-07, which permits mortgagees to seek assignment of a HECM immediately after utilizing their own funds to pay property taxes and insurance on or after March 1, 2020, in addition to it eliminating the three-year waiting period for such assignments. Both waivers are effective through June 30, 2022.
The same day, the agency announced in FHA INFO 2021-71 the availability of the new COVID-19 Recovery Loss Mitigation Options training webinar, initially previewed in FHA INFO 21-61 (previously covered by InfoBytes here). The webinar is designed to help mortgage servicers and other stakeholders better understand the details of the new COVID-19 Recovery Loss Mitigation Options.
New York governor extends moratorium on residential and commercial evictions
On September 2, New York’s Governor Hochul extended the moratorium on Covid-19-related residential and commercial evictions until January 15, 2022. According to the announcement, “all protections of the Tenant Safe Harbor Act for residential tenants who are suffering financial hardship as a result of the pandemic will remain in place, along with new protections on commercial evictions.” For our previous coverage regarding the eviction moratorium, see here.
The new law also: (i) creates a $25 million fund to provide legal services to tenants facing eviction proceedings and to aid them in maintaining housing stability in areas of New York where there is not access to free legal assistance for such services; and (ii) establishes a $250 million Supplemental Emergency Rental Assistance program to serve additional households and to better support landlords