DOJ/CFPB SCRA letters to landlords and mortgage servicers
Last week, the United States Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) jointly issued letters to landlords and mortgage servicers about protections servicemembers have under the Servicemembers Civil Relief Act (SCRA). The letters warned landlords and mortgage servicers to be mindful of the specific protections that servicemembers may have under the SCRA with respect to housing. This blog will focus on the mortgage servicer letter, which is more likely to be relevant to credit unions that may be servicing mortgage loans covered by the SCRA.
The letter directed to mortgage servicers focused on the likelihood that servicemembers might be completing mortgage forbearance plans related to COVID-19 hardships and warned servicers to “ensure that servicemember and veteran mortgage borrowers’ rights under federal law are diligently protected during the loss mitigation process, and that any issues identified are addressed expeditiously.” Several of the issues addressed in the letter were identified in CFPB Bulletin 2021-02 as issues the CFPB would monitor as more and more consumers moved from COVID-19 forbearances in search of loan modifications governed by Regulation X’s loss mitigation rules. Those issues include failing to report servicemembers who received an accommodation to consumer reporting agencies as required by the CARES Act or providing servicemembers with incorrect information about forbearance or loss mitigation options. The letter examined some of the CARES Act protections (e.g., section 4021 requirements regarding credit reporting post-accommodation) and the protections implemented by the mortgage servicing final rule published in June 2021 (e.g., amending the early intervention requirements to make sure that borrowers affected by COVID-19 have a “meaningful opportunity” to pursue loss mitigation and providing for temporary safeguards to limit when servicers can proceed with the first filing or notice in foreclosure through December 31, 2021).
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