CFPB Revises Mortgage Servicing Proposal

The CFPB received more than 80 comments on the proposal, with what the attorneys described as an 'unusual degree of convergence' among groups that rarely agree (1). The American Bankers Association (ABA) has urged the CFPB to finalize only a limited portion of the 2024 proposal, pressing the bureau to focus on targeted changes rather than a full rewrite (1). 'The Bureau’s 2024 proposal was founded on the misconception that servicers prioritize foreclosure over helping borrowers find a successful solution to resolve their payment disruptions,' Teshale Smith, the ABA’s senior counsel for regulatory compliance and policy, said in a letter to the CFPB in June (1). [1]

The 2024 proposed rule aimed to make permanent several pandemic-era practices used when large numbers of borrowers needed fast assistance (1). Industry estimates showed that 8.8 million families were helped, with the re-default rate for loans exiting COVID-19 loss-mitigation programs at about 10%, ABA said in its letter (1). The proposal allows servicers to evaluate loss-mitigation options before borrowers complete an application, prohibits late fees and other charges while a loss-mitigation review is underway, and makes assistance possible in multiple languages (1). [1]

The CFPB has sent a revised version of its 2024 mortgage servicing proposal to the White House Office of Management and Budget (OMB) for review, signaling a potential narrowing of the final rule compared to the original proposal (1). Industry attorneys suggest that the final rule may be significantly narrower than the 2024 proposal, which was developed when the CFPB was led by Rohit Chopra (1). The 2024 proposal aimed to make permanent several pandemic-era practices that assisted borrowers during the crisis, with estimates indicating that 8.8 million families were helped (1). [1]

The CFPB received more than 80 comments on the proposal, with what the attorneys described as an 'unusual degree of convergence' among groups that rarely agree (1). The 2024 proposed rule aimed to make permanent several pandemic-era practices used when large numbers of borrowers needed fast assistance (1). [1]

The move comes in the wake of President Donald Trump’s March 13 executive order, 'Promoting Access to Mortgage Credit,' which directs the CFPB to modernize Dodd-Frank-era rules that lenders and servicers say increase compliance costs (1). The current standards were finalized in 2013 (1). [1]

The American Bankers Association (ABA) has urged the CFPB to finalize only a limited portion of the 2024 proposal, pressing the bureau to focus on targeted changes rather than a full rewrite (1). [1]

The Consumer Financial Protection Bureau (CFPB) last week took another step toward finalizing new loss-mitigation standards, sending a revised version of its 2024 mortgage servicing proposal to the White House Office of Management and Budget (OMB) for review (1). The final rule, 'Streamlining Mortgage Servicing for Borrowers Experiencing Payment Difficulties' under Regulation X, is expected to be narrower than the 2024 proposal advanced when the CFPB was led by Rohit Chopra, according to industry attorneys. The CFPB did not immediately reply to HousingWire's request for comments. The move comes in the wake of President Donald Trump's March 13 executive order, 'Promoting Access to Mortgage Credit,' which directs the CFPB to modernize Dodd-Frank-era rules that lenders and servicers say increase compliance costs. [1]

The CFPB received more than 80 comments on the proposal, with what the attorneys described as an 'unusual degree of convergence' among groups that rarely agree (1). The American Bankers Association (ABA) has urged the CFPB to finalize only a limited portion of the 2024 proposal, pressing the bureau to focus on targeted changes rather than a full rewrite. 'The Bureau's 2024 proposal was founded on the misconception that servicers prioritize foreclosure over helping borrowers find a successful solution to resolve their payment disruptions,' Teshale Smith, the ABA's senior counsel for regulatory compliance and policy, said in a letter to the CFPB in June. [1]

The 2024 proposed rule aimed to make permanent several pandemic-era practices used when large numbers of borrowers needed fast assistance (1). Industry estimates showed that 8.8 million families were helped, with the re-default rate for loans exiting COVID-19 loss-mitigation programs at about 10%, ABA said in its letter. The proposal allows servicers to evaluate loss-mitigation options before borrowers complete an application, prohibits late fees and other charges while a loss-mitigation review is underway, and makes assistance possible in multiple languages. [1]

Sources

HousingWire

Prepared with AI assistance from the cited sources.