HUD proposal would reduce regulatory burden, reflect consumer preferences

CUNA applauds the Department of Housing and Urban Development’s (HUD) proposal on modernizing engagement with mortgagors in default in comments filed Friday.

“These proposed changes are supported by data and will reduce the regulatory burden in reaching out to mortgagors in default. Moreover, the proposed changes reflect consumer preferences in how consumers use technology for their banking services in a post-pandemic world,” the letter reads. “Credit unions have indicated that they may be able to service their FHA-insured mortgage loans more efficiently because they do not have to worry about how to address the burdensome face-to-face meeting requirements and can use technology to meet with mortgagors from their central servicing headquarters.

Credit unions also believe that the proposed changes will provide for greater efficiency in the loss mitigation process, permitting credit unions to provide more timely information to members in default,” it adds.

Existing regulations generally require mortgagees of single-family mortgages insured by the Federal Housing Administration (FHA) to have a face-to-face interview with the mortgagor or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid.

The proposal would eliminate the face-to-face requirement for the majority of FHA-insured mortgages. Mortgagees could continue to meet with mortgagors face-to-face, but they could also choose to have meetings using “other communication methods, including electronic or other remote communication methods such as telephone or video calls.