Mortgage Servicer Briefing On Several Biden Housing Policy Promises

As predicted last week, the White House today announced key policy updates for borrowers impacted by COVID, which directly impact customer care and compliance for servicers. Before we get into servicer implications, let’s take a look at the specifics of the policy announcement.

Here’s a quick summary:

• The eviction ban is extended through July 31
• White House announcement detailed several items that are strong for consumers but that create more real-time policy changes that servicers must adapt to in real-time. These policy updates will:
  • Urge State and Local Courts to Participate in Eviction Diversion Efforts.
  • Highlight that American Rescue Plan Funds for State and Local Governments and for Emergency Rental Assistance Can Be Used to Fund Eviction Diversion Plans, Including Counseling, Navigator, and Legal Services.
  • Convene a White House Summit for Immediate Eviction Prevention Plans.
  • Strongly encourages partnerships with courts to actively prevent evictions and develop eviction diversion programs.
  • Ensure that the 30-day Eviction Notice Requirement for Federally-Backed Properties is Enforced.
  • Make Clear the Fair Housing Act Must Be Followed.

Additionally, the White House extended both foreclosure and forbearance policies, saying this:

“Once the moratoria end, HUD, VA, and USDA will take additional steps to prevent foreclosures on mortgages backed by those agencies until borrowers are reviewed for COVID-19 streamlined loss mitigation options that are affordable, while FHFA will continue to work with Fannie Mae and Freddie Mac to ensure that borrowers are evaluated for home retention solutions prior to any referral to foreclosure.”

The announcement went on to say that HUD, VA, and USDA will continue to allow homeowners who have not already taken advantage of forbearance to enter into forbearance through September 30, 2021. Those homeowners with Fannie Mae and Freddie Mac-backed mortgages will also continue to be able to enter into forbearance if they have not already utilized it.

The announcement continued: “Finally, HUD, VA, and USDA will be announcing additional steps in July to offer borrowers payment reduction options that will enable more homeowners to stay in their homes.”

Implications for Servicers

The policy direction announced is indicative of the gradual wind-down of COVID policies. We expect that July 31 is the last foreclosure moratorium extension and that forbearance applications will end on September 30.

Still pending is the CFPB Regulation X rule change, which we expect to be finalized in the coming weeks. Notably, that rule will include a “foreclosure review period” that will effectively prohibit foreclosures through the end of the year.

Combined with yesterday’s announcement by the MBA that total forbearances fell below 4 percent, we are moving into the next stage of the post-COVID response, with a focus on helping borrowers in need of loss mitigation.

The Bottom Line

Mortgage lenders and servicers must be prepared for anything, and they must be able to act on real-time regulatory changes while maintaining full compliance and seamless customer care for struggling borrowers.

Since the pandemic started, Sagent has been powering fast homeowner hardship self-serve and on-demand configurability to ensure servicer compliance with real-time policy changes. How?

Because Sagent’s modern platform lets lenders simply configure (rather than re-code) for real-time compliance changes. Sagent’s 3 core performing, non-performing, and consumer platforms have kept servicers in front of all policy and regulatory changes during this unprecedented era.

We’re on standby to talk about how to help you care for borrowers during this critical phase.