On June 28, 2021, the Consumer Financial Protection Bureau released final rule (The 2021 Rule) amending some of the provisions of Rule X. The 2021 Rule establishes temporary procedural safeguards for borrowers affected by COVID-19 before foreclosure can be noticed or initiated on their primary residence. and provides optimized views on loss reduction. The CFPB said the 2021 Rule “will help ensure a smooth and orderly transition as other federal and state protections come to an end, giving borrowers a real opportunity to explore ways to resume payments and prevent foreclosures.”
The 2021 Rule, effective 31 August 2021, includes the following key amendments to Rule X:
- service companies must comply with temporary special due process guarantees prior to foreclosure on certain mortgages by the end of the year;
- Services can offer optimized loan modifications to borrowers experiencing COVID-19 difficulties without forcing borrowers to submit all paperwork for every option. These optimized loan modifications cannot increase payments to borrowers and cannot have other protections built in; as well as
- Service companies will need to expand their reach with borrowers before foreclosure begins and provide borrowers with key information about their repayment or other options when they communicate with borrowers who are out of tolerance or struggling to make mortgage payments related to COVID-19.
While the provisions of the 2021 Rule are not particularly surprising, the burden on service providers to comply quickly is significant. While the 2021 Rule does not apply exclusively to loans in COVID-19 abstinence plans, the number of homeowners remaining in such plans (21.8 million as of May) gives service providers an insight into the flow of loans that would require the application of the 2021 Rule. The sheer volume of borrowers likely to be affected by the 2021 Rule and the speed at which service providers will need to implement these changes pose a challenge for service companies not seen since Rule X was last amended in 2013. and the service providers had more time between the 2013 final rule and the effective date than indicated here. To avoid litigation and compliance actions that arose as a result of the 2013 amendments, service providers must act quickly and work with legal counsel to review the 2021 Rule, make a plan to determine which loans are affected by the 2021 Rule, and update templates. , policies and procedures for compliance.
 The CFPB is not clear on how maintainers should determine if mortgaged real estate is a “primary residence,” only clarifying that the 2021 Rule does not apply to abandoned properties.