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The American Bankers Association (ABA) appreciates the opportunity to talk about the Consumer Financial Protection Bureau's (Bureau) interim last rule (IFR) affecting the treatment of specific COVID-19 associated Loss Mitigation Options under RESPA and Reg. X. ABA values the Bureau's understanding of the intricate concerns dealing with mortgage customers and servicers throughout the COVID-19 [pandemic](https://aceakl.com) and the Bureau's effort to offer short-term services that facilitate servicer choices to assist pandemic-affected customers. ABA believes that the IFR provides an efficient balance of debtor defenses and servicer flexibility, which will benefit both consumers and industry considerably.
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Summary of the Comment:
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ABA highly supports the IFR's arrangements that amend Regulation X to permit mortgage servicers to offer momentarily particular loss mitigation options without getting a complete loss mitigation application. These temporary lodgings will significantly help servicers by solving regulative doubts worrying the application of Regulation X to post-forbearance processes, and they will considerably decrease problems connected with requirements to process complete loss mitigation applications for loan deferrals. Given the high volumes of loans that are [presently](https://dasseygeneralgroup.com) in COVID-related forbearances, we believe the benefits of this guideline are considerable.
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In addition, the explanations in the IFR will eliminate a number of the sticking around compliance uncertainties surrounding Government Sponsored Enterprise (GSE) programs that feature structured application treatments.2 Because other mortgage investors and insurance companies have announced similar loss mitigation choices, and considering that additional main and secondary are likely to utilize GSE models as templates for their own COVID forbearance programs, we believe this IFR will have a [robust positive](https://asiaeproperty.com) influence on markets and customers.
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However, ABA suggests extra modifications to the IFR that will further help debtors and [servicers](https://allmineestates.in) during this unprecedented time and better attain the Bureau's objectives. We talk about these suggestions listed below.
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[Additional](http://eruditrealestate.com) Recommendations:
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First, 12 CFR 1024.41(c)( 2 )(v)(B) offers that a servicer does not need to send a loss mitigation application acknowledgment letter or abide by the sensible diligence obligations to help a debtor finish an application" [o] nce the debtor accepts a deal made pursuant to" the IFR. While ABA fully supports the Bureau's goal of lowering problems on servicers throughout these unsure times and thinks this is completely suitable under the circumstances, we do not think the rule, as written, will have the designated result. Many, perhaps most, of the discussions where a servicer examines and provides a deferral plan will be considered a [loss mitigation](https://www.cacecyluxuryhomes.co.ke) application pursuant to Regulation X, which would normally set off the requirement to send a recommendation letter within 5 business days. Following these conversations, servicers can not wait to see if the customer accepts the deferral offer before figuring out whether it needs to please the acknowledgment letter requirements. Practically speaking, it would appear that the only time in which the interim last guideline would allow a servicer to forgo the acknowledgment letter requirements is if the borrower is allowed to, and in turn does, accept the deferral offer on the preliminary telephone call with the servicer. To accomplish what we presume to be the Bureau's intent, ABA recommends that the Bureau move the recommendation letter timeline to 5 company days after a customer declines any deferment offer.
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Second, in order to certify as a deferral under the IFR, a servicer needs to "waive [] all existing late charges, charges, stop payment charges, or comparable charges immediately upon the debtor's acceptance of the loss mitigation option." As written, it appears that servicers should waive all of these amounts, even if the charges or charges were accrued or assessed long before the COVID-19 pandemic. For circumstances, a customer could have a late cost from 2018 that is outstanding. However, in order to get approved for this alternative under the IFR, the servicer will need to consent to waive that cost.
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ABA believes that requiring the waiver of any amounts that were accumulated or evaluated pre-COVID is unreasonable, arbitrary, and will likely serve as a considerable deterrent to offering a deferral plan. ABA prompts the Bureau to clarify that the waiver uses just to quantities accrued or evaluated as a result of a payment that was not paid due to the fact that of a financial challenge due, straight or indirectly, to the COVID-19 emergency situation.
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Additionally, the phrase "comparable charges" in the IFR is uncertain and is generating substantial confusion in the market. ABA asks the Bureau to think about eliminating this phrase or, in the alternative, clarify it. ABA presumes that the Bureau did not intend for this arrangement to need servicers to waive 3rd [party expenditures](https://al-ahaddevelopers.com) that are generally enabled to be passed onto borrowers-expenses such as residential or commercial property evaluation costs, residential or commercial property preservation costs, foreclosure attorney costs, and so forth. At a minimum, ABA respectfully demands that the Bureau consider clarifying that the provision does not cover these types of expenses/charges.
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ABA Responses to Specific Ask For Comment:
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The Bureau is especially thinking about whether the modifications properly balance offering flexibility to servicers to provide relief rapidly throughout the COVID-19 emergency situation with providing essential securities for borrowers participated in the loss mitigation application procedure, such as protections from foreclosure.
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ABA believes that the Bureau has appropriately balanced consumer protection and operational efficiency. ABA concurs with the Bureau's evaluation that additional flexibilities are appropriate during the extraordinary situations presented by the COVID-19 emergency. The structured application treatments stated in the IFR help ensure that servicers have the resources to address the incredibly big number of debtors that will [exit forbearances](https://montenegrohomeplus.me) in the coming months. The guideline properly stabilizes these streamlined procedures with customer securities. The unique payment deferral programs advanced by the Federal Housing Finance Agency (FHFA) and other entities will allow eligible customers to avoid the danger of losing their homes, and permit them to resume repaying their mortgage loans without incurring a delinquency or extra fees or interest, and the programs offer choices on how to pay back the [forborne](https://ibiolavilla.com) amount that servicers have actually delayed. This interim rule guarantees that the consumer advantages and defenses meant by these nationwide programs are effectively guaranteed as a condition to any regulative benefits supplied.
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The Bureau likewise looks for comment on whether to need written disclosures for this, or any comparable exceptions that the Bureau may license in the future.
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Most lenders memorialize the deal with a deal letter to the customer. This letter is a simple and succinct verification of the loss mitigation solution and statement that the payments deferred will lead to the forborne amounts being due at refinance, sale, or benefit of the loan. ABA would not advise a short-term deal disclosure as an extra requirement during disasters or emergencies. This requirement would increase the burden and slow the relief the servicer is using to their customers. In addition, it may puzzle the customer with unneeded kinds at a stressful point at the same time.
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The Bureau also looks for discuss whether the Bureau must extend the exception developed in new ยง 1024.41(c)( 3 )(v) to other post-forbearance loss mitigation choices offered to borrowers affected by other types of disasters and emergencies.
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ABA believes the advantages [afforded](https://realestate.zoeay.com) under this IFR should be broadened to other post-forbearance loss mitigation choices developed to eliminate COVID-affected debtors and also to customers affected by other types of disasters and emergencies. The VA, USDA and FHA use feasible loan modification options, such as improve adjustments, that are not covered under this exemption, too other Fannie Mae and Freddie Mac loss mitigation solutions, such as Flex Mods. Our company believe these options are all advantageous to the consumer and needs to be offered in an effective and structured manner throughout this emergency situation and other catastrophes and emergency situations.
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These other adjustment options would not qualify under the interim rule mainly due to the fact that of the prohibition on interest accrual on delayed payments and the requirement that the covered amounts should be repaid at the end of the loan term. We see no legitimate reason to omit these important COVID-19 programs from the menu of alternatives available to consumers based upon an insufficient loss mitigation application. Some debtors will not receive the [payment deferral](https://meza-realestate.com) options, and [extra alternatives](https://hectare24.com) will be vital to assure relief for all customers.
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ABA suggests that the Bureau customize the requirements under 1024.41(c)( 2 )(v)(A)( 2) so that the relief provided by the guideline can be [utilized](https://kythai.plotpropertywala.org) for other types of loss mitigation solutions. This little explanation would significantly expand customer alternatives that are needed during the COVID-19 pandemic as well as other disasters and emergency situations.
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The Bureau has no reason to think that the additional flexibility provided to covered individuals by this interim final rule would differentially impact consumers in backwoods. The Bureau demands comment regarding the effect of the amended arrangements on customers in rural locations and how those effects may differ from those experienced by customers typically.
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ABA does not see the requirement for additional versatility in the IFR for servicers in backwoods.
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Conclusion:
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ABA values the [opportunity](https://smalltownstorefronts.com) to comment on this proposition. If you have any concerns about the content of this letter, please contact Sharon Whitaker at 202-663-5321 or Rod Alba at 202-663-5592.
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