NCUA Letter to CUs Offers Info on End of Pandemic Homeowner Protection Programs

Credit unions are being reminded by NCUA that many homeowner protection programs put in place by the government during the pandemic are now expiring, and credit unions have until Sept. 30 to act on a number of related issues.

In a Letter to Credit Unions, the agency provided what it called “critical information” for complying with the expiration of the protection programs.

“The NCUA strongly encourages credit unions to work with borrowers who are exiting the forbearance period,” said the letter. “Such assistance may include helping borrowers to lower their payments. Credit unions need to provide this assistance in a safe and sound manner and comply with all applicable consumer financial protection laws. Credit unions should refer to the Consumer Financial Protection Bureau’s (CFPB) website for more information on federally backed mortgage-modification programs.”

Among the points made by NCUA in the Letter:

• The deadline is Sept. 30, to grant forbearance through provisions of the Coronavirus Aid Relief and Economic Security Act (CARES Act). The agency noted Section 4022 of the Act, as amended, provides homeowners with federally backed mortgages the option to temporarily suspend their monthly mortgage payments up to 18 months. Borrowers who have not previously been in forbearance have until Sept. 30 to request assistance.
• Section 4013 CARES Act states that loans may be modified – including forbearance – until Jan. 1 without designation as a “troubled debt restructuring” (TDR) under certain criteria. NCUA reminded that these criteria include: the loan existed before Dec. 31, 2019; the modification is related to COVID-19; the borrower was fewer than 30 days past due as of Dec. 31, 2019; and the modification is executed between March 1, 2020, and the earlier of Jan. 1, 2022, or 60 days after the date of termination of the national emergency concerning COVID–19 outbreak declared by the president on March 13, 2020.
• The moratorium foreclosure expired July 31. However, NCUA said the CFPB recently issued a final rule temporarily amending certain mortgage servicing requirements under Regulation X to assist borrowers affected by COVID-19.

“Among other amendments, the final rule establishes temporary special COVID-19 loss mitigation procedural safeguards to ensure that a borrower has a meaningful opportunity to pursue loss mitigation options,” NCUA said.

It further noted that between Aug. 31 and year’s end, a servicer must meet at least one of the specified safeguards before initiating any judicial or non-judicial foreclosure processes where a borrower became more than 120 days delinquent on or after March 1, 2020.

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