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Mortgage Servicing Rules in Response to the Continuing COVID-19 Pandemic and CARES Act

The Board of Governors of the Federal Reserve, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and state financial regulators (collectively, the agencies) have issued a joint statement to alert industry that the supervisory flexibilities outlined in the April 2020 Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act (April 2020 Joint Statement) no longer apply. This is discussed in Financial Institution Letter FIL-73-2021 dated November 10, 2021.

  • The agencies are issuing this joint statement to communicate their supervisory and enforcement approach to mortgage servicers.
  • On April 3, 2020, the agencies issued the April 2020 Joint Statement to clarify the application of the Regulation X mortgage servicing rules and explain that, until further notice, the agencies would not take supervisory or enforcement action against mortgage servicers for failing to meet certain timing requirements under the mortgage servicing rules, provided the servicers made good faith efforts to meet those requirements.
  • More than 18 months have passed since issuance of the April 2020 Joint Statement, the temporary supervisory and enforcement flexibility announced in the April 2020 Joint Statement no longer apply.
  • The agencies will continue to 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. As part of their considerations, the agencies will factor in the time it takes to make operational adjustments in connection with this joint statement.

On a related matter via Financial Institution Letter FIL-79-2021 dated December 17, 2021, the FDIC has updated the technical assistance videos on the mortgage servicing rules. The information in the five videos is intended as a high-level overview to help FDIC-supervised institutions understand and comply with the mortgage servicing rules.

  • These videos incorporate the 2016 Mortgage Servicing Rule and the 2016 Fair Debt Collection and Practices Act Interpretive Rule. The video series focuses on the small servicer as defined in Regulation Z; however, video 3 provides an overview of some of the requirements for financial institutions that lose their small servicer status. The videos range in duration from around 8 to 27 minutes.
    • Video 1 provides an overview of mortgage servicing and describes how to determine whether a servicer meets the definition of a small servicer under Regulation Z. (10:12)
    • Video 2 describes key provisions for which small servicers do not have an exception. These are the provisions with which all servicers, small and large, must comply. (27:23)
    • Video 3 provides an overview of some of the requirements that apply to large servicers and from which small servicers are exempt. This video is useful for large servicers. (12:08)
    • Video 4 describes successors in interest, including the definition of successor in interest and a general overview of what to be aware of when working with successors in interest. (8:00)
    • Video 5 provides information and examples related to developing a compliance management system that considers the mortgage servicing rules. (11:41)

These recent Financial Institution Letters are indicative of regulatory attention to mortgage servicing rule compliance.