The Consumer Financial Protection Bureau (CFPB) finalized its mortgage servicing protections rule Monday designed to facilitate a smooth transition as federal foreclosure moratoriums expire. CUNA expressed several concerns about the CFPB’s original proposal which included a foreclosure moratorium, and the final rule acknowledges CUNA’s comments about the proposal’s insufficient tailoring and its potential to do more harm than good.

“We thank the CFPB for listening to CUNA and other concerns about the overbroad and potentially-harmful proposed moratorium,” said CUNA President/CEO Jim Nussle. “We share the bureau’s goal of getting consumers through the pandemic and its effects, and credit unions will continue their efforts to work with credit union members.”

Under the CFPB’s rule, credit unions will retain the discretion and ability to initiate foreclosure if the borrower:

• Has abandoned the property;
• Is more than 120 days behind on their mortgage payments and has not responded to specific required outreach from the mortgage servicer for 90 days; or
• Has submitted a complete loss mitigation application and been evaluated for options other than foreclosure and there are none available.

These protections only apply to loans that became more than 120 days delinquent after March 1, 2020 and where the statute of limitations expires on or after Jan. 1, 2022.

These procedural protections only apply to first notice or first filings to initiate foreclosures between the effective date of August 31, 2021 and the sunset date of January 1, 2022.

The rule also finalized other mortgage servicing protections related to borrowers exiting forbearance including CUNA-sought clarity regarding live contact. The rule becomes effective August 31, but a servicer may voluntarily take certain actions discussed in the 2021 Rule before this date for certain provisions.

Additionally, the Bureau does not intend to take supervisory or enforcement action against servicers that offer a borrower a streamlined loan modification based on an incomplete application prior to that date, so long as the modification meets the criteria outlined in the 2021 rule.