The Consumer Financial Protection Bureau issued guidance to mortgage servicers to assist in complying with the Coronavirus Aid, Relief and Economic Security Act provisions granting a right to forbearance to consumers impacted by the COVID-19 pandemic.
Servicers of federally-backed mortgages, such as Fannie Mae or Freddie Mac, the Department of Housing and Urban Development, the Department of Veterans Affairs, or the Department of Agriculture loans, must grant forbearance to borrowers with pandemic-related hardships that may last as long as two consecutive 180-day periods.
Additional interest, fees, or penalties beyond the amounts scheduled or calculated should also be waived with no negative impact to the borrower’s mortgage contract during the forbearance.
Mortgage servicers could violate the CARES Act and potentially cause consumer harm if they were to require documentation from borrowers to prove financial hardship, if they did not grant the forbearance once properly requested, or if they steered borrowers away from forbearance or misled them, the agency said.
The CFPB issued the guidance jointly with the Conference of State Bank Supervisors, with which it had previously issued guidance describing borrowers’ rights to mortgage payment forbearance and foreclosure protection under federal law.