Coronavirus and HUD / CFPB Mortgage Lending Updates

The U.S. Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB) issued separate updates on Monday aimed at clarifying or issuing guidance to their specific sectors in the wake of increasing concern related to the outbreak of the COVID-19 coronavirus.

HUD issued a new informational notice aimed to remind mortgagees of the various loss mitigation program options available to them from the Federal Housing Administration (FHA), in light of concerns related to the spread of the virus.

“As with any other event that negatively impacts a borrower’s ability to pay their monthly mortgage payment, FHA’s suite of loss mitigation options provides solutions that mortgagees should offer to distressed borrowers – including those that could be impacted by the coronavirus – to help prevent them from going into foreclosure,” the notice reads in part.

The relevant home retention options are located in the FHA Single Family Housing Policy Handbook 4000.1, in section III.A.2.

The CFPB, meanwhile, released a statement aimed at encouraging American financial institutions to meet any needs of consumers that arise as a result of the outbreak.

“The agencies recognize the potential impact of the coronavirus on the customers, members, and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision,” the CFPB statement reads. “Regulators note that financial institutions should work constructively with borrowers and other customers in affected communities. Prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism.”

The statement goes on to say that financial regulators understand that institutions may be faced with unique challenges as a result of the virus, including staff shortages for those whose employees elect to either remain at, or work from home.

“In cases in which operational challenges persist, regulators will expedite, as appropriate, any request to provide more convenient availability of services in affected communities,” the CFPB said. “The regulators also will work with affected financial institutions in scheduling examinations or inspections to minimize disruption and burden.”

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