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62 » guaranteed or insured by the Department of Veterans Affairs or the Department of Agriculture; or » purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association. For servicers of mortgages not covered by the CARES Act, the provisions of the Act serve as guidance applicable to servicers helping millions of borrowers with covered loans. Given the profound impact of the pandemic across all sectors of the economy and its 24-hour coverage in the news, consumers are aware of the assistance made available by the law. However, awareness of important details is generally lost on the average consumer. us, for servicers of non-federally backed mortgages, it is likely that the calls will come in large volume from borrowers seeking help from loan servicers. Helping borrowers stay in their homes and maintain their lives generally yields a positive outcome over the long haul for borrowers, lenders, local economies, and the government. CONSUMER RIGHT TO REQUEST FORBEARANCE Section 4022 of the Act provides that a borrower experiencing financial hardship due to the COVID-19 pandemic can request forbearance for a federally backed mortgage loan, regardless of delinquency status. is process occurs through the submission of a request by a borrower to the servicer of his or her mortgage affirming that he or she is experiencing a financial hardship during the COVID–19 emergency. Upon this request by a borrower, the servicer is required to grant forbearance for up to 180 days. e servicer shall extend the duration of the forbearance for an additional period of up to 180 days. Upon receiving a request for forbearance from a borrower, the law provides that a servicer shall grant the request with no additional documentation required other than the borrower's attestation to a financial hardship caused by the COVID–19 emergency. e law explicitly provides that during the period of forbearance "no fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract" can be assessed on the borrower. Servicers should be careful to comply with this prohibition. Governance processes and system-driven controls must ensure that no fees, penalties, or interest beyond the amounts scheduled or calculated—as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract¬—are charged. ese controls must remain fully established in connection with the 180-day forbearance period, as well as an extension for an additional period of up to 180 days, provided that the request is made during the covered period (although not specifically defined in the law, it presumably means during the original 180-day period) and that at the borrower's request, either the initial or extended period of forbearance may be shortened. FORECLOSURE MORATORIA Section 4022(c)(2) of the Act further provided that servicers of federally backed mortgage loans could not initiate any judicial or nonjudicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on March 18, 2020, which has been extended by federal housing agencies until August 31, 2020. e Act provided an exception for a vacant or abandoned property. It is always prudent to closely monitor foreclosure and collection policies, procedures, and actual practices to ensure fairness and appropriate customer treatment at all times. AGENCY GUIDANCE FACTORS INTO THE EQUATION On April 3, the Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act was released. is was a joint statement by the Consumer Financial Protection Bureau (CFPB), Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and Conference of State Bank Supervisors whereby they formally recognized the serious impact of the COVID-19 emergency on consumers and on the operations of many supervised entities, including mortgage servicers. e agencies stated an understanding that the COVID-19 crisis could impose temporary business disruptions and staffing challenges, thereby impeding the ability of lenders and servicers to assist consumers. Moreover, the agencies are emphasizing the potential for consumer confusion about how to access and exercise options offered by mortgage servicers. In issuing the Joint Statement, the agencies clarified the application of the mortgage servicing rules under Regulation X and established expectations for supervision and enforcement relative to the rules on short- term options as the industry works through the covered period. Coinciding with the release of the Joint Statement, the CFPB issued it's Mortgage Servicing Rules FAQs related to the COVID-19 Emergency. e FAQs support the Joint Statement by addressing common questions and themes. While not a substitute for Regulation X, Regulation Z, or the associated official interpretations, the FAQs provide focus for helping servicers managing burgeoning requests from borrowers for help. Short-Term Loss Mitigation Options: Regulation X generally requires servicers to obtain a complete loss-mitigation application For mortgage lenders and servicers, the pandemic will prove to be a test of business continuity planning while managing process and regulatory changes in real time, all while maintaining fairness and compliance across all aspects of day-to-day operations. Feature By: Thomas Grundy

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