At the close of this month, certain moratoria on foreclosures and evictions are set to lift. While prior deadlines have been extended, it remains to be seen whether another continuance will be granted amidst an increase in the spread of the COVID-19 Delta variant.

Last month, the Federal Housing Finance Agency announced that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac extended their moratorium on single-family foreclosures and real estate owned (REO) evictions from June 30 to July 31. The foreclosure moratorium only applies to homeowners with a GSE-backed, single-family mortgage, and the REO eviction moratorium applies only to properties that have been acquired by the GSEs through foreclosure or deed-in-lieu of foreclosure transactions. The extensions are implemented in Fannie Mae Lender Letter LL-2021-02 and Freddie Mac Guide Bulletin 2021-23.

The CDC also announced an extension of its current moratorium on residential evictions for nonpayment of rent through July 31, noting that “this is intended to be the final extension of the moratorium.”

In conjunction with the Biden-Harris administration and other federal agencies, the FHA also extended its foreclosure and eviction moratoria for all FHA-insured, single-family mortgages, except vacant or abandoned properties, through July 31. The FHA also continued its extension of the deadline for first legal action and reasonable diligence timeframes for 180 days after July 31, 2021, to provide servicers with the additional time needed to focus their work on assisting distressed homeowners.

To assist homeowners who remain at risk of falling behind on their mortgage payments due to COVID-19, the FHA extended the time period for homeowners to start new forbearance plans to September 30, 2021. Homeowners who have not previously been in COVID-19 forbearance can request this pause or reduction in mortgage payments.

The FHA established the COVID-19 Advance Loan Modification, which offers significant payment relief to eligible homeowners. This new home retention option is for those homeowners for whom a 30-year rate and term mortgage modification would bring the mortgage current and reduce the principal and interest portion of their monthly mortgage payment by at least 25 percent.

Finally, to assist seniors with Home Equity Conversion (reverse) mortgages who have been negatively impacted by COVID-19, the FHA is extending the ability for these homeowners to request an extension before the servicer may request that the loan be called due and payable. For extension requests received between July 1, 2021, and September 30, 2021, servicers must grant homeowners an extension of up to six months.

We will keep you posted on any further extensions here.

 

On July 21, Acting Director Dave Uejio celebrated the 10-year anniversary of the Consumer Financial Protection Bureau (CFPB) by giving prepared remarks highlighting the CFPB’s activities over the past 10 years in enforcement, consumer empowerment, and racial equity, as well as its response to the COVID-19 pandemic. Uejio advised that the CFPB’s enforcement and supervision work has resulted in approximately $14.4 billion in consumer relief and that its enforcement actions have resulted in $1.7 billion in civil penalties; however, he notes that there is much more to be done in enforcement. Continue Reading The Consumer Financial Protection Bureau Celebrates 10-Year Anniversary

In Hunstein v. Preferred Collection and Management Services, Inc., 994 F.3d 1341 (11th. Cir. 2021), the Eleventh Circuit held that a debt collector’s communication of a consumer’s personal information to a third party print vendor violated the Fair Debt Collection Practices Act’s prohibition on third party communications in connection with debt collection under 15 U.S.C. § 1692c(b).

Hunstein will likely require major operational changes for many loan servicers. At a minimum, loan servicers who qualify as a “debt collector” under the FDCPA should rethink how to utilize third party vendors for such basic operations as printing and higher functions such as loss mitigation. Although it is theoretically possible to continue using such vendors without communicating the personal information of the consumer, the efficiencies of using such vendors will be diminished. The short term solution to avoid exposure under Hunstein will likely entail bringing such services in house—a major shift in industry practices. Continue Reading 11th Circuit Issues FDCPA Decision That Could Dramatically Impact Mortgage Servicers Operations

The Office of the Comptroller of the Currency’s (the OCC) True Lender Rule is all but repealed.  On May 11, 2021, the U.S. Senate voted to approve a joint resolution to repeal the True Lender Rule under the Congressional Review Act (the CRA).  The House is expected to pass the measure and the president has expressed support for the resolution. Continue Reading The True Lender Rule: One Step Closer to Repeal

Today the Consumer Financial Protection Bureau (CFPB) issued an interim final rule supporting the Centers for Disease Control and Prevention’s (CDC) temporary eviction moratorium. The CDC’s temporary eviction moratorium has been extended through June 30, 2021 based on the current and projected epidemiological context of SARS-CoV-2 transmission throughout the United States. The CDC order generally prohibits landlords from evicting tenants for non-payment of rent if the tenant submits a written declaration that they are unable to afford full rental payments and would likely become homeless or have to move into a shared living setting. This prohibition applies to an agent or attorney acting as a debt collector on behalf of a landlord or owner of the residential property. Continue Reading The CFPB Issues Interim Final Rule Clarifying that Tenants Can Hold Debt Collectors Accountable for Illegal Evictions

On April 5th, the CFPB proposed a set of rule changes intended to prevent foreclosures as emergency federal foreclosure protections expire this summer. Given that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain, the proposed rules seek to ensure that servicers and borrowers work together to prevent foreclosures.

The proposed rules intend to:

  1. Give borrowers time: The proposed rules provide a special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after December 31, 2021.
  2. Give servicers options: The proposed rules permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application. This provision would only be available for modifications that do not increase a borrower’s monthly payment and that extend the loan’s term by no more than 40 years from the modification’s effective date.
  3. Keep borrowers informed: The proposed rules provide temporary changes to certain required servicer communications to make sure that borrowers receive key information about their options at the appropriate time.

Continue Reading CFPB Proposes Mortgage Servicing Rule Changes to Prevent Foreclosures

The CFPB issued a compliance bulletin on April 1st warning mortgage servicers to take all necessary steps to prevent a wave of foreclosures this fall. The CFPB advised that beginning with the expiration of the federal foreclosure moratoriums at the end of June 2021, mortgage servicers will need ramped-up capacity to reach out and respond to the large number of homeowners requiring loss mitigation assistance. The CFPB will monitor how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation. The Bureau is focused on preventing avoidable foreclosures.

“Servicers who put struggling families first have nothing to fear from our oversight, but we will hold accountable those who cause harm to homeowners and families,” said CFPB Acting Director Dave Uejio. Read the full compliance bulletin and policy guidance here.

While the COVID-19 pandemic affected nearly every industry last year, the consumer finance industry faced unique challenges in the wake of economic changes and government response. In this report Perkins Coie offers an analysis of the past year’s most noteworthy regulatory developments and litigation outcomes in the mortgage lending and servicing industry. We review the policies established by federal and state governments in response to the COVID-19 pandemic and the adjustments made by mortgage lenders and servicers in response to the new policies and regulations.

Read the full report here.

CFPB Director nominee, Rohit Chopra, testifies about his potential regulatory and enforcement priorities in Senate Hearing. President Biden tapped Rohit Chopra, currently the FTC Commissioner, as his nominee to serve as the Consumer Finance Protection Bureau’s (CFPB) Director. During his nomination hearing in front of the United States Senate Committee on Banking, Housing, and Urban Affairs, Chopra testified about his potential regulatory and enforcement priorities as head of the consumer finance regulator. In his prepared statement, Chopra acknowledged the widespread and lasting effects of the global pandemic and highlighted particular concerns for the housing market. During the hearing, Chopra spoke about the economic crisis from a decade ago and “how unlawful and avoidable foreclosures proved to be catastrophic in cities, small towns, and rural areas alike, contributing to deeper social divisions and inequities.” He also mentioned that if confirmed, he would focus on fair lending. Chopra also answered questions about Fintech, credit reporting, the housing market and other topics. See his full testimony here.

As the government revives its Paycheck Protection Program (PPP) with hundreds of billions of dollars in additional loans available to small businesses, there are fresh signs that government fraud investigations and whistleblower litigation related to the loan program are ramping up. DOJ’s first-ever settlement of violations of the civil False Claims Act related to the PPP highlight the scrutiny facing the PPP and risks for borrowers just as the PPP enters a new phase following the December 27, 2020, Economic Aid Act. This update provides an overview of the latest developments in fraud enforcement actions related to the PPP and key takeaways from the recent False Claims Act settlement.

Click here to read the full update.