In the latest demonstration that there’s a “new CFPB” as well as other new regulatory sheriffs in town, the CFPB, the federal banking agencies (OCC, FDIC, Federal Reserve Board, and NCUA), and state financial regulators issued a joint statement yesterday to announce that they will no longer provide “supervisory and enforcement flexibility” to mortgage servicers in meeting compliance requirements. Concurrently with the release of the joint statement, the CFPB also issued a report titled “Mortgage Servicing Efforts in Response to the COVID-19 Pandemic.”
In April 2020, the agencies issued a joint statement to announce that, in response to the COVID-19 pandemic, they would not take supervisory or enforcement action against mortgage servicers for failing to meet certain timing requirements in the Regulation X mortgage servicing rules as long as the servicers made a good faith effort to provide the required notices or disclosures and took related actions within a reasonable time period.
In the joint statement issued yesterday, the agencies announce that “the temporary flexibility described in the April 2020 Joint Statement no longer applies” and that they “will apply their respective supervisory and enforcement authorities, where appropriate, to address any noncompliance or violations of the Regulation X mortgage servicing rules that occur after [November 10, 2021].” The agencies explain that they believe the temporary flexibility is no longer needed “because servicers have had sufficient time to adjust their operations by, among other things, taking steps to work with consumers affected by the COVID-19 pandemic and developing more robust business continuity and remote work capabilities.”
The agencies conclude the joint statement by advising servicers that they “will consider, when appropriate, the specific impact of servicers’ challenges that arise due to the COVID-19 pandemic and take those issues in account when considering any supervisory and enforcement actions.” They further state that “[a]s part of their considerations, the agencies will factor in the time it takes to make operational adjustments in connection with the joint statement.” This suggests that the agencies might provide some leniency in the event of non-compliance. However, it is clear from the overall message delivered by the agencies that servicers who rely on this suggestion with the expectation that they will receive leniency for non-compliance do so at their peril.
CFPB mortgage servicing report. The report reviews actions taken by the CFPB to “respond to the evolving needs of homeowners and CFPB supervised entities,” including prioritized assessments of mortgage servicers and a targeted review of high-risk complaints related to COVID-19. forbearance. The CFPB states that it will continue targeted data collection and evaluation efforts to assess how individual servicers performed for consumers exiting forbearance.” As part of those evaluation efforts, the CFPB plans to use “complaints, supervisory information, and other available data.”