We Discuss These Recommendations Below

The American Bankers Association (ABA) appreciates the opportunity to discuss the Consumer Financial Protection Bureau's (Bureau) interim final rule (IFR) impacting the treatment of specific COVID-19 related Loss Mitigation Options under RESPA and Reg. X. ABA appreciates the Bureau's understanding of the intricate issues dealing with mortgage customers and servicers during the COVID-19 pandemic and the Bureau's initiative to provide momentary solutions that facilitate servicer choices to assist pandemic-affected debtors. ABA believes that the IFR provides a reliable balance of borrower securities and servicer versatility, which will benefit both consumers and industry significantly.

Summary of the Comment:

ABA highly supports the IFR's arrangements that change Regulation X to permit mortgage servicers to offer briefly specific loss mitigation alternatives without obtaining a complete loss mitigation application. These momentary accommodations will considerably help servicers by resolving regulatory doubts concerning the application of Regulation X to post-forbearance processes, and they will considerably lower concerns connected with requirements to process total loss mitigation applications for loan deferments. Given the high volumes of loans that are currently in COVID-related forbearances, we believe the advantages of this guideline are substantial.

In addition, the information in the IFR will get rid of a number of the remaining compliance unpredictabilities surrounding Government Sponsored Enterprise (GSE) programs that include structured application treatments.2 Because other mortgage financiers and insurance providers have actually revealed similar loss mitigation alternatives, and given that additional primary and secondary market entities are most likely to use GSE models as templates for their own COVID forbearance programs, we believe this IFR will have a robust favorable influence on markets and customers.

However, ABA suggests extra changes to the IFR that will even more aid borrowers and servicers throughout this extraordinary time and better accomplish the Bureau's goals. We discuss these recommendations below.

Additional Recommendations:

First, 12 CFR 1024.41(c)( 2 )(v)(B) provides that a servicer does not need to send a loss mitigation application acknowledgment letter or comply with the affordable diligence commitments to help a debtor finish an application" [o] nce the borrower accepts an offer made pursuant to" the IFR. While ABA totally supports the Bureau's goal of reducing concerns on servicers during these uncertain times and thinks this is entirely appropriate under the circumstances, we do not believe the rule, as composed, will have the designated result. Many, perhaps most, of the discussions in which a servicer assesses and uses a deferral plan will be thought about a loss mitigation application pursuant to Regulation X, which would normally set off the requirement to send out an acknowledgment letter within five service days. Following these discussions, servicers can not wait to see if the borrower accepts the deferral offer before identifying whether it needs to please the recommendation letter requirements. Practically speaking, it would seem that the only time in which the interim final guideline would permit a servicer to pass up the acknowledgment letter requirements is if the customer is permitted to, and in turn does, accept the deferral deal on the preliminary telephone call with the servicer. To accomplish what we presume to be the Bureau's intent, ABA advises that the Bureau move the recommendation letter timeline to 5 company days after a debtor declines any deferment offer.

Second, in order to certify as a deferral under the IFR, a servicer should "waive [] all existing late charges, penalties, stop payment fees, or comparable charges quickly upon the borrower's approval of the loss mitigation choice." As composed, it appears that servicers need to waive all of these quantities, even if the charges or charges were accrued or assessed long before the COVID-19 pandemic. For instance, a customer might have a late fee from 2018 that is exceptional. However, in order to receive this alternative under the IFR, the servicer will need to agree to waive that cost.

ABA believes that requiring the waiver of any amounts that were accrued or assessed pre-COVID is unreasonable, approximate, and will likely function as a considerable deterrent to offering a deferral strategy. ABA urges the Bureau to clarify that the waiver uses only to amounts accrued or assessed as a result of a payment that was not paid due to the fact that of a monetary difficulty due, directly or indirectly, to the COVID-19 emergency situation.

Additionally, the expression "similar charges" in the IFR is uncertain and is producing considerable confusion in the industry. ABA asks the Bureau to think about eliminating this phrase or, in the option, clarify it. ABA presumes that the Bureau did not plan for this arrangement to require servicers to waive 3rd party costs that are generally permitted to be passed onto borrowers-expenses such as residential or commercial property assessment charges, residential or commercial property conservation fees, foreclosure attorney fees, and so forth. At a minimum, ABA respectfully requests that the Bureau consider clarifying that the arrangement does not cover these types of expenses/charges.

ABA Responses to Specific Ask For Comment:

The Bureau is especially interested in whether the amendments properly stabilize supplying versatility to servicers to use relief quickly during the COVID-19 emergency situation with offering important protections for customers engaged in the loss mitigation application procedure, such as protections from foreclosure.

ABA thinks that the Bureau has properly well balanced consumer protection and operational effectiveness. ABA agrees with the Bureau's assessment that additional flexibilities are suitable during the remarkable situations presented by the COVID-19 emergency situation. The streamlined application treatments stated in the IFR help make sure that servicers have the resources to attend to the exceptionally big number of borrowers that will exit forbearances in the coming months. The guideline adequately balances these structured processes with consumer defenses. The unique payment deferment programs advanced by the Federal Housing Finance Agency (FHFA) and other entities will enable qualified customers to avoid the risk of losing their homes, and allow them to resume repaying their mortgage loans without sustaining a delinquency or additional costs or interest, and the programs offer choices on how to repay the forborne quantity that servicers have postponed. This interim rule ensures that the consumer advantages and protections planned by these nationwide programs are successfully guaranteed as a condition to any regulative benefits offered.

The Bureau likewise looks for comment on whether to need written disclosures for this, or any similar exceptions that the Bureau might authorize in the future.

Most lenders memorialize the deal with an offer letter to the debtor. This letter is a simple and concise verification of the loss mitigation option and statement that the payments postponed will result in the forborne quantities being due at re-finance, sale, or benefit of the loan. ABA would not suggest a short-term deal disclosure as an additional requirement throughout disasters or emergency situations. This requirement would increase the burden and slow the relief the servicer is offering to their debtors. In addition, it might confuse the consumer with unneeded types at a demanding point in the procedure.

The Bureau likewise seeks discuss whether the Bureau must extend the exception established in new § 1024.41(c)( 3 )(v) to other post-forbearance loss mitigation options offered to borrowers impacted by other kinds of disasters and emergencies.

ABA thinks the advantages paid for under this IFR must be expanded to other post-forbearance loss mitigation options created to relieve COVID-affected customers and also to borrowers affected by other types of catastrophes and emergencies. The VA, USDA and FHA offer feasible loan adjustment choices, such as streamline adjustments, that are not covered under this exemption, also other Fannie Mae and Freddie Mac loss mitigation options, such as Flex Mods. Our company believe these alternatives are all helpful to the customer and needs to be readily available in an efficient and structured way throughout this emergency situation and other catastrophes and emergencies.

These other modification options would not certify under the interim rule mainly due to the fact that of the restriction on interest accrual on postponed payments and the requirement that the covered amounts need to be paid back at the end of the loan term. We see no valid factor to exclude these valuable COVID-19 programs from the menu of choices offered to consumers based upon an incomplete loss mitigation application. Some borrowers will not receive the payment deferral options, and extra options will be crucial to assure relief for all consumers.

that the Bureau modify the criteria under 1024.41(c)( 2 )(v)(A)( 2) so that the relief offered by the rule can be utilized for other types of loss mitigation options. This small information would considerably expand customer options that are essential throughout the COVID-19 pandemic in addition to other disasters and emergency situations.

The Bureau has no reason to think that the extra versatility offered to covered persons by this interim last rule would differentially affect consumers in backwoods. The Bureau demands comment relating to the impact of the amended arrangements on customers in backwoods and how those impacts may differ from those experienced by consumers generally.

ABA does not see the need for extra flexibility in the IFR for servicers in rural areas.

Conclusion:

ABA values the chance to discuss this proposal. If you have any questions about the material of this letter, please contact Sharon Whitaker at 202-663-5321 or Rod Alba at 202-663-5592.