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Issue link: http://digital.dsnews.com/i/1481911
64 More than two years after the COVID-19 pandemic took hold of the country, mortgage servicers may finally be in a position to come up for air and reflect on the whirlwind of the recent past. Among other things, the servicing industry has had to navigate the quick enactment of the CARES Act forbearance program, a constant barrage of agency and government-sponsored entity (GSE) guideline announcements and developments, a patchwork of state mandates, last-minute changes to the federal servicing rules in Regulation X, and intense public scrutiny from the Consumer Financial Protection Bureau (CFPB). To date, servicers have collectively provided assistance to many millions of mortgage loan borrowers who were impacted by the pandemic. While there is certainly still more work to be done, servicers' willingness to help consumers and the overall effort put forth by the servicing industry at large has been admirable and commendable. As the frequency and magnitude of COVID-19-related developments continues to slow down, now is a good time to reflect on the past couple of years and begin to plan for the future. What has worked well and could be incorporated into our standard servicing practices moving forward, and what lessons could be learned from mistakes that were made to improve the landscape for mortgage loan borrowers and their servicers in the future? Especially as fears of a recession grow, it would be prudent for everyone—servicers and regulators alike—to think hard about default servicing improvements and reforms. Many industry groups and other interested parties have already been contemplating new forward-thinking policy ideas, such as putting more reliance on forbearance as a go-to option for consumers who are in the early stages of a financial hardship. However, there are also many legislative and regulatory reforms that should be considered as we move into a post-COVID-19 world. is article outlines a few such ideas. WHERE WE'VE BEEN Coming out of the financial crisis of the late 2000s, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the CFPB and instructed the new agency to implement reforms in the mortgage servicing industry. In 2013, the CFPB released its final mortgage servicing rules, and they became effective in January 2014. e new rules covered three main areas related to default servicing: (1) early intervention, which established an early and ongoing communication framework for borrowers who become delinquent; (2) NEXT STEPS FOR DEFAULT SERVICING As fears of a recession grow, it would be prudent for everyone—servicers and regulators alike—to think hard about default servicing improvements and reforms. Feature By: Jonathan R. Kolodziej