Loss mitigation policies and procedures

The NAFCU compliance team has blogged about short-term forbearance plans and what the Consumer Financial Protection Bureau’s (CFPB) Regulation X might require when providing a credit union’s members with that relief. Earlier this month, the CFPB issued frequently asked questions (FAQs) about the intersection of its mortgage servicing rules under Regulation X and Regulation Z with the COVID-19 national emergency. The NAFCU compliance team blogged about the mortgage servicing FAQs that related to the loss mitigation rules contained in section 1024.41 of Regulation X. The latter blog specifically addressed the CFPB’s position on whether a forbearance provided under section 4022 of the Coronavirus Aid Relief and Economic Security Act (CARES Act) constitutes a short-term loss mitigation option under section 1024.41. That blog also described the communications required by the rule. For more information about forbearance plans required by section 4022 of the CARES Act, please see this NAFCU compliance blog.

Today’s blog addresses the Regulation X requirements related to a credit union’s mortgage loan servicing policies and procedures and loss mitigation. As you may recall, section 1024.41 generally requires credit unions to exercise reasonable diligence in completing a loss mitigation application for review. Section 1024.41(c)(2)(iii) provides an exception to the general rule for short-term repayment plans and forbearance plans. The rule requires a particular notice be provided promptly after the forbearance or repayment plan is offered to the member. The earlier NAFCU compliance blog explains the content requirements for that specific notice.



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