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The NCUA Tuesday issued a Regulatory Alert to provide federally-insured credit unions (FICUs) with an outline of important changes made by the CFPB’s interim final rule (IFR) – which became effective July 1 – amending parts of Regulation X. Specifically, the NCUA noted changes that could impact FICUs that service mortgages regulated by Regulation X.

The CFPB issued the IFR amending Regulation X to clarify that mortgage servicers do not violate the regulation's provisions by offering certain coronavirus-related loss mitigation options based on an evaluation of limited application information collected from the borrower.

In the Regulatory Alert, the NCUA highlighted that under the rule, a mortgage servicer may offer a borrower a loss mitigation deferral option based on its evaluation of limited information collected from a borrower, if certain criteria – described in the rule – are met.

“Credit unions that qualify as a small servicer are not subject to the relevant portions of Regulation X and are not affected by the amendment in the interim final rule,” noted NCUA Chairman Rodney Hood in the alert. “However, a small servicer is subject to the prohibition on certain foreclosure activities in Regulation X.”

The new exception permits FICUs to align their loss mitigation programs with the criteria of the Federal Housing Finance Agency (FHFA) coronavirus payment deferral, or other comparable programs.

The FHFA announced in May that the government-sponsored enterprises (GSEs) would begin offering a new payment deferral option for loans in forbearance. The payment deferral option allows borrowers who are able to return to making their normal monthly mortgage payment the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity.

“Credit unions that qualify as a small servicer are not subject to the relevant portions of Regulation X and are not affected by the amendment in the interim final rule,” Hood added. “However, a small servicer is subject to the prohibition on certain foreclosure activities in Regulation X.”

Read the full Regulatory Alert here.

Earlier this month, NAFCU Senior Regulatory Counsel Elizabeth LaBerge discussed the Regulation X IFR with the CFPB and asked the bureau to address other post-forbearance options, like disaster flex loan modifications, in a similar way so credit unions are not burdened trying to compile full loss mitigation applications when they are not required by investors for review.

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.