Addressing the CFPB’s 2021 Mortgage Servicing COVID-19 Final Rule and Gap
On June 28, 2021, the CFPB issued a final rule amending certain provisions in Regulation X regarding additional assistance for borrowers experiencing a COVID-19-related hardship.
The final rule temporarily adds to existing foreclosure protection conditions in certain circumstances. From August 31, 2021 through December 31, 2021, unless an exception applies, the servicer must make sure at least one of three temporary procedural safeguards has been met before referring certain 120-day delinquent accounts to foreclosure as follows:
1. Borrower was evaluated based on a complete loss mitigation application and existing foreclosure protection conditions are met. To meet this safeguard, the servicer must confirm that:
a. The borrower submitted a complete loss mitigation application and it was completely evaluated;
b. The borrower remained delinquent since the application submission; and
c. The foreclosure protections in the existing Mortgage Servicing Rules are met.
2. The property is abandoned. To meet this safeguard, applicable state or local law determines whether a property is abandoned.
3. Borrower is unresponsive to servicer outreach. To meet this safeguard, the servicer must not have received any communications from the borrower in the 90 days prior to the foreclosure referral. Per the Mortgage Servicing Rules, the servicer must confirm:
a. Compliance with early intervention live-contact requirements during the period;
b. Early intervention 45-day written notice required was provided and sent at least 10 days but no more than 45 days;
c. Compliance with all loss mitigation requirements during the period; and
d. Borrower forbearance, if applicable, ended at least 30 days before foreclosure referral.
Loss Mitigation Safeguard
In addition to our existing Loss Mitigation Quality Control process and current Default pre-foreclosure review, the Loss Mitigation Department is building a dedicated team to complete a second review of accounts removed or closed out of loss mitigation without a successful workout. This additional effort will be undertaken so that proper disposition of these loans occurred and all loss-mitigation efforts were exhausted prior to foreclosure referral.
Abandoned Properties Safeguard
Cenlar uses property inspection vendors that are subject matter experts on the local and jurisdictional requirements surrounding the identification and management of abandoned properties. If the property is determined to be vacant or abandoned, it is secured in accordance with all local rules and requirements.
In addition, a property inspection checklist is completed on every loan by our Default Compliance review team so that inspection results match system coding and that the inspection results determination is consistent with inspector feedback and photos. Any discrepancies are escalated to the property preservation team for review and the referral is held until resolved. The Homeowner Advocate team also performs these same activities as a secondary validation prior to final foreclosure referral determination.
Unresponsive Borrower Safeguard
To meet this safeguard’s requirement “the servicer must not have received any communications from the borrower in the 90 days prior to the foreclosure referral.” Cenlar does not intend to use this safeguard as it is worded too broadly and may add unnecessary risk. For example, potential scenarios include a borrower who called us and did not authenticate through our IVR, visited the website and used our Virtual Assistant or, perhaps, contacted you directly.
Addressing the Gap – August 1 through August 31, 2021
While the rule is effective on August 31, 2021, foreclosure moratoriums are scheduled to end on July 31, 2021.
This difference has opened a month-long gap between the end of the moratoriums and the effective date for the final rule. Cenlar will address the gap period by proceeding with our approach to the final rule as previously shared.
Please note there are two exceptions to the final rule:
1. If the loan was more than 120-days delinquent prior to March 1, 2020; and
2. If the foreclosure referral occurs on or after January 1, 2022 as the statute of limitations will expire before January 1, 2022.
Except as described above, we will proceed with foreclosure referral/resumption on loans where a CFPB stated exception exists. Cenlar will further proceed with foreclosure activities for accounts already determined to be ineligible for assistance, were seriously delinquent at the start of the pandemic, or are vacant or abandoned.
We all know that buying a first home can be confusing and daunting. So, too, is the experience for homeowners when their mortgage is transferred to another financial institution. Then, there’s just the usual questions, such as escrow, receipt of 1098s, payment information and taxes.
In order to assist homeowners in all stages of homeownership, we’ve been shifting to a more proactive, multichannel approach to homeowner communications. Our goal is to find ways to make homeowners feel more welcomed, valued and educated about their most meaningful asset. We want to provide “just-in-time” information, too. That kind of events-driven content, such as escrow, gives homeowners the information they need when they need it.
We also want to use all channels to their best purpose. For example, we use text messages for brief communications about transactions, such as notice of receipt of payment. Emails and statement messages are well suited for more informational campaigns, such as welcome, digital options, escrow and 1098. And, the website works for all information, both evergreen and seasonal.
In all of our communications – whether letters, mailers, email, statement messages, or our website, IVR, Virtual Assistant or text messaging – we’re striving to use jargon-free, friendly and simple language. Our objective is to satisfy homeowners with the answers they need by strategically using all of these channels to connect.
We are committed to providing the best experience we can for your homeowners. For a look at our current inventory of email communications, please go to Training and Reference > User Manuals on CenAccess.
The inventory is labeled Standard Borrower Email Catalog. Over time, we plan to increase and refine our homeowner communications. Be on the lookout for ongoing information as we continue to rollout our proactive, multichannel approach.
ICYMI: Citrix Network Password Change
Required Change – This is Not a Phishing Campaign!
Citrix recently released security updates to strengthen its Workspace App for Windows. To update our systems with the required upgrade, all Citrix users will be required to change their passwords. Cenlar clients will be requested to do so beginning the week of August 2, 2021.