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64 Continuity of Contact Requirements: e FAQs recognize that servicers may experience customer service call center staffing challenges due to the pandemic. As such, assigning a "single point of contact" to each delinquent borrower may prove difficult. e FAQs grant some flexibility on this requirement, stating that "servicers must maintain policies and procedures reasonably designed to assign personnel to a delinquent borrower that can assist the borrower with loss mitigation options" and that a "servicer has discretion to determine whether to assign a single person or a team of personnel." Annual Escrow Statement: e FAQs, in response to the question of whether servicers must conduct the annual escrow analysis and send annual escrow statements required by Regulation X, stipulates that the answer is yes. is response recognizes that escrow statements may generate call volume and contribute to borrower anxiety. As with earlier questions, the agencies do not intend to cite in an examination or bring an enforcement action against servicers for delays in sending the annual escrow statement—provided servicers make a good faith effort within a reasonable time. e agencies suggest that servicers inform the borrower that they are forgoing collection for several months on any shortage or deficiency. e FAQs provide a reminder of the exemption from providing an annual escrow account statement when a borrower is more than 30 days past due. For borrowers who are subsequently reinstated and return to current status, servicers must provide a history of the account since the last annual statement within 90 days of the account's reinstatement date to current status. Electronic Communications With Borrowers: e FAQs affirm that servicers may send servicing notices in electronic form and are subject to the requirements of the Electronic Signatures in Global and National Commerce Act. Payoff Statements: e FAQs address the question of whether servicers can take more than seven business days to provide a payoff statement due to operational challenges brought on by the pandemic. e FAQs state that while the servicer does not need to provide the statement within seven business days, it should be provided within a "reasonable time." Exemptions for Small Servicers: To the question of whether small servicers are subject to the requirements, the FAQs provide that small servicers do not have to comply with the early intervention and continuity of contact requirements. Small servicers must comply with the foreclosure restrictions of Regulation X, 12 CFR 1024.41(j), as well as the escrow requirements of Regulation X, 12 CFR 1024.17. With respect to foreclosure restrictions, the FAQs make it clear that small servicers shall not: » provide the first notice or filing required to foreclose, unless the: » borrower's mortgage loan obligation is more than 120 days delinquent, » foreclosure is based on a borrower's violation of a due-on-sale clause, or » servicer is joining the foreclosure action of a superior or subordinate lienholder » provide the first notice or filing required to foreclose if a borrower is performing pursuant to the terms of a loss mitigation agreement; and » move for foreclosure judgment or order of sale or conduct a foreclosure sale in the case of a borrower who is performing pursuant to the terms of a loss mitigation agreement. e FAQs also remind that small servicers are subject to and must comply with the payoff statement provisions in Regulation Z, 12 CFR 1026.36(c)(3). TRYING TIMES ese are truly unprecedented times. Consumers are facing difficult choices. As the Joint Statement underscores, mortgage servicers play a vital role in assisting consumers in providing options for paying their mortgages. e current crisis presents potential financial challenges to borrowers; the CARES Act Section 4022 and 4023 are intended to provide some measure of related relief. However, there is a risk of confusion for borrowers, lenders, and mortgage servicers. e flexibility that the agencies can offer pursuant to the Joint Statement, and as further clarified by the CFPB's FAQs, helps to reduce the immediate regulatory risk and pressure. e focus is on making a good faith effort to respond to the needs of borrowers. However, mortgage servicers must make certain that their existing Regulation X related compliance practices for loss mitigation are appropriately modified in light of the guidance set forth in the Act and the guidance published by the agencies. Given the stress of the times we're living through, it is vital to not lose sight of the fact that these efforts must be fulfilled in a fair and responsible manner. rough reasonable efforts to maintain a tone of fairness and compassion; to ensure that governance is up to date with regulatory guidance; that processes and system controls are in alignment; and that reasonable monitoring of workflows and production output is conducted, the mortgage servicing industry can and must move forward. While resources may be stressed, keep an eye to the future, knowing that the metrics of the current period will tell the story of the good faith effort made. DISCLAIMER: e information and views set forth in this piece are general in nature and are not intended as legal or professional advice. Although based on the law and information available as of the date of publication, general assumptions have been made by Wolters Kluwer Financial Services that may not take into account potentially important considerations to specific businesses. erefore, the views and information presented in this feature may not be appropriate for you. Readers must also independently analyze and consider the consequences of subsequent developments and/ or other events. Readers must always make their own determinations in light of their specific circumstances. Thomas Grundy, CRCM, is Senior Director, U.S. Advisory Services for Wolters Kluwer. He has 34 years' combined experience as a former regulator, compliance professional, and consultant. Grundy launched his career as an examiner for the Office of the Comptroller of the Currency and later served as an oversight examiner for the Federal Reserve Board in Washington. In his current role, he advises banking, credit union, mortgage, student lending, and financial technology clients. He can be reached at omas.Grundy@ WoltersKluwer.com.

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