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NAFCU Senior Regulatory Counsel Elizabeth LaBerge wrote to the CFPB in response to the bureau's interim final rule (IFR) amending Regulation X. The IFR, which became effective July 1, offers clarification on the treatment of deferral loss mitigation options under the Real Estate Settlement Procedures Act (RESPA) and Regulation X amid the coronavirus pandemic.

“While the interim final rule is helpful, there are still unnecessary regulatory hurdles for consumers with loans owned by Fannie Mae or Freddie Mac, the government-sponsored enterprises (GSEs), who cannot qualify for deferral and may need a disaster modification instead,” wrote LaBerge.

The IFR amends Regulation X to clarify that mortgage servicers do not violate the regulation’s provisions by offering certain coronavirus-related deferral loss mitigation options based on an evaluation of limited application information collected from the borrower. The IFR details certain criteria loss mitigation options must meet to qualify for the coronavirus-related exception and provides some relief for servicers.

In the letter, LaBerge urged the CFPB to adopt a common-sense adjustment to the rule’s requirements by removing the requirement to obtain a complete loss mitigation application that addresses certain disaster options in light of the limited capacity of credit unions and their member-borrowers. LaBerge also suggested that the CFPB should not institute additional notice requirements for the same reason.

On disaster modifications, LaBerge called on the CFPB to issue an additional or amended IFR that addresses disaster flex modifications offered by the GSEs. Previously, LaBerge met with the CFPB to discuss the Regulation X IFR and asked the Bureau to address other post-forbearance options, like disaster flex loan modifications, so credit unions are not burdened trying to compile full loss mitigation applications when they are not required by investors for review.

“Delaying the determination as to a borrower’s qualification for this flex modification where no additional paperwork or information is needed is unnecessary, burdensome for credit unions, and ultimately harmful to borrowers as delinquent amounts continue to accumulate,” wrote LaBerge.

NAFCU has continued to share concerns about the impacts of sections of the CARES Act that provide borrowers with forbearance options for single-family and multifamily loans sold to the GSEs. Since the CARES Act was enacted at the end of March, NAFCU has worked with Congress, the FHFA, NCUA, and Treasury Department to address concerns about the health of mortgage markets and provide credit unions with additional relief.