On Friday, April 3rd, Federal and state financial regulators issued a joint policy statement providing needed regulatory flexibility to enable mortgage servicers to assist consumers affected by COVID-19. The guidance is pursuant to new requirements for mortgage servicers under the CARES Act, which requires servicers to contact borrowers to let them know of available mortgage forbearance options. The policy statement clarifies that the agencies do not intend to take supervisory or enforcement action against mortgage servicers for delays in sending certain early intervention and loss mitigation notices, provided that the servicers are making good faith efforts to provide these notices and take action within a reasonable time.
Separate from that announcement, on April 4th, fifteen industry groups and organizations—including the Structured Finance Association—issued a statement calling upon government regulators to provide a source of liquidity to those mortgage servicers that may need additional capacity to support homeowners and renters impacted by COVID-19. The letter to policymakers notes that, due to the breadth and length of the Congressionally-mandated forbearance framework under the CARES Act, mortgage servicers across the industry—including servicers of Agency, GSE and PLS mortgages—will require support in the form of a liquidity facility.
This request echoes similar calls for action made by Chairman Crapo of the Senate Committee on Banking Housing and Finance, who urged the Department of Treasury and the Federal Reserve to prioritize facilities that stabilize key markets, such as the mortgage servicing market, as well as Chairwoman Waters of the House Committee on Financial Services, who stated in a letter to the Federal Reserve that “Congress expects [the Federal Reserve] will act promptly to establish and implement this facility.” Together, these statements indicate both an industry need and Congressional intent to establish a liquidity facility for servicers. The Structured Finance Association continues to engage with policymakers to remove impediments to liquidity access and ensure actionable regulatory guidance is available during the unprecedented economic events associated with COVID-19.