Taking effect July 1, the CFPB has instructed mortgage lenders to waive the requirement that loan modifications only be extended to customers who have submitted a complete loan modification application. Borrowers facing temporary hardships would benefit from a quicker and more efficient application process.
The new rule would allow mortgage servicers to extend relief sooner if they meet certain criteria that benefit struggling borrowers during the COVID-19 emergency.
To qualify for the exemption during the pandemic, mortgage servicers must meet three criteria. Servicers must allow a borrower who became delinquent to delay all principal and interest payments; refrain from charging any fees or accrued interest while the relief is in place; and ensure that acceptance of a loan modification offer resolves the borrower’s delinquency status.