Client Bulletin 7/16/21
CFPB Issues COVID-19 Mortgage Servicing Final Rule
On June 28, 2021, the CFPB issued a final rule amending certain provisions in Regulation X regarding additional assistance for homeowners experiencing a COVID-19-related hardship.
The final rule applies to all closed-end mortgage loans secured by a homeowner’s principal residence, regardless of whether the loan is federally backed or held in portfolio. The final rule is effective on August 31, 2021.
There are four main components to the final rule:
- Temporary Procedural Safeguards Prior to Initiating Foreclosure Actions
- COVID-19 Streamlined Loan Modifications (Anti-Evasion Clause Exception)
- Early Intervention
- Reasonable Diligence
1. Temporary Procedural Safeguards Prior to Initiating Foreclosure Actions
In lieu of labeling these requirements as a “foreclosure moratorium,” the CFPB has instead implemented “temporary procedural safeguards” before servicers can initiate a new foreclosure action between August 31, 2021 and
December 31, 2021.
With limited exceptions, servicers must ensure at least one of the procedural safeguards below has been met before initiating a new foreclosure action:
- The homeowner was evaluated based on a complete loss mitigation application and the homeowner remained delinquent since submission of the loss mitigation application.
- The property is abandoned or considered abandoned under applicable state or local law.
- The homeowner is unresponsive to servicer outreach.
NOTE: There are numerous requirements associated with each procedural safeguard.
2. COVID-19 Streamlined Loan Modifications (Anti-Evasion Clause Exception)
Generally, Regulation X prohibits mortgage servicers from offering loss mitigation options based upon the evaluation of an incomplete application. However, the final rule permits servicers to offer certain COVID-19-related loan modification options based on the evaluation of an incomplete application.
3. Early Intervention
The final rule temporarily requires a servicer to provide borrowers with specific information, including information related to forbearance programs and housing counseling services. This requirement is effective until October 1, 2022.
4. Reasonable Diligence
If a borrower is in a short-term payment forbearance program related to a COVID-19-related hardship, the final rule specifies when the servicer must renew reasonable diligence efforts.
New Daily Tax Report Reduces Need to Send Due Date Change Requests
Starting this month, our Tax Department will make life less taxing for clients. We’re now providing a daily “tax due date” report via SFTP that will provide a snapshot of what the tax lines on new loan flow look like after tax contracting and completion of our courtesy Closing Disclosure (CD) review. The review entails comparing the earliest tax due date on MSP, built according to the tax work rule, to the earliest tax due date on the CD. If there’s a variance, the due date on MSP will be updated to coincide with the CD.
Clients can use the report to review final results prior to requesting any due date changes. While the courtesy review is provided to reduce client-allocated tax penalties and advances as a result of tax work rule-related closing errors, it is not a catch-all. Clients are ultimately responsible for following their chosen tax work rule.
Clients can use the report to review final results prior to requesting any due date changes. While the courtesy review is provided to reduce client-allocated tax penalties and advances as a result of tax work rule-related closing errors, it is not a catch-all. Clients are ultimately responsible for following their chosen tax work rule.
How to Read the Report
The report has two tabs. The first tab is a key chart with the five possible results and descriptions.
- Adjustment made to one or more tax lines
- Unable to review
- No adjustment required
- Adjustment made to one or more tax lines – Client request
- No adjustment required – Client request
The second tab will display all loans that completed the due date review the prior business day and the result of the review. The result listed is at LOAN level, not LINE level.
If due date changes are required after reviewing this report, please submit them in bulk via CCM or via email to TaxExceptions@cenlar.com until you receive CCM access.
Loans will be marked “Unable to review” (See #2 above) if the Closing Disclosure is missing or illegible in Meta at the time of the courtesy review. These loans will not be re-reviewed so clients should review them immediately and notify us of any due date changes needed. The Closing Disclosure is a required document that is to be imaged with the closing package within 5-7 days of Acquisition.
Updated MAL Tax Table
The Master Agency Listing Tax Table (MAL Table) captures Cenlar’s method for disbursing tax payments at the payee level. The table, which reflects the disbursement dates and payee frequency used by Cenlar, should not be used as an origination tool to prevent escrow shortages and untimely tax payments. The MAL Table is refreshed weekly and posted on CenAccess.