[Federal Register Volume 90, Number 94 (Friday, May 16, 2025)]
[Rules and Regulations]
[Pages 20791-20795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08643]
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CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1024
[Docket No. CFPB-2025-0014]
RIN 3170-AB42
Protections for Borrowers Affected by the COVID-19 Emergency
Under the Real Estate Settlement Procedures Act (RESPA), Regulation X;
Rescission
AGENCY: Consumer Financial Protection Bureau.
ACTION: Interim final rule; request for public comment.
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SUMMARY: This interim final rule (IFR) rescinds the final rule
``Protections for Borrowers Affected by the COVID-19 Emergency Under
the Real Estate Settlement Procedures Act (RESPA), Regulation X.''
DATES: This IFR is effective on July 15, 2025. Comments must be
received on or before June 16, 2025.
ADDRESSES: You may submit responsive information and other comments,
identified by Docket No. CFPB-2025-0014, by any of the following
methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. A brief summary of
this document will be available at https://www.regulations.gov/docket/CFPB-2025-0014.
Email: [email protected].
Include Docket No. CFPB-2025-0014 in the subject line of the message.
Mail/Hand Delivery/Courier: Comment Intake--Protections
for Borrowers Affected by the COVID-19 Emergency Under the Real Estate
Settlement Procedures Act (RESPA), Regulation X, Rescission, c/o Legal
Division Docket Manager, Consumer Financial Protection Bureau, 1700 G
Street NW, Washington, DC 20552.
Instructions: The CFPB encourages the early submission of comments.
All submissions should include the agency name and docket number.
Additionally, where the Bureau has asked for specific comment on a
topic, commentors should seek to highlight the topic to which its
comment is applicable. Because paper mail is subject to delay,
commenters are encouraged to submit
[[Page 20792]]
comments electronically. In general, all comments received will be
posted without change to https://www.regulations.gov. All submissions,
including attachments and other supporting materials, will become part
of the public record and subject to public disclosure. Proprietary
information or sensitive personal information, such as account numbers
or Social Security numbers, or names of other individuals, should not
be included. Submissions will not be edited to remove any identifying
or contact information.
FOR FURTHER INFORMATION CONTACT: Dave Gettler, Paralegal Specialist,
Office of Regulations, at 202-435-7700. If you require this document in
an alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION: This IFR rescinds ``Protections for
Borrowers Affected by the COVID-19 Emergency Under the Real Estate
Settlement Procedures Act (RESPA), Regulation X,'' 86 FR 34848 (June
30, 2021) (2021 COVID RESPA Rule), for two reasons:
First, the 2021 COVID RESPA Rule adopted temporary procedural
safeguards related to mortgage foreclosure, temporarily permitted
mortgage servicers to offer certain loan modifications made available
to borrowers experiencing a COVID-19 related hardship, and finalized
certain temporary amendments to Regulation X related to the COVID-19
pandemic. The rule stated that the temporary procedural safeguards do
not apply if a servicer makes the first notice or filing required by
applicable law for any judicial or non-judicial foreclosure process on
or after January 1, 2022. In addition, the rule stated that the
temporary COVID-19 related live contact requirements would only be
required until October 1, 2022. On April 10, 2023, then-President Biden
signed a joint resolution of Congress declaring that ``the national
emergency declared by the finding of the President on March 13, 2020''
related to the COVID-19 pandemic ``is hereby terminated.'' See Public
Law 118-3 (Apr. 10, 2023). The Bureau finds that it has good cause to
remove, without prior notice and comment, language relating to the
COVID-19 pandemic added by the 2021 COVID RESPA Rule, as prior notice
and comment is unnecessary. Both the temporary additional early
intervention live contact requirements and the temporary special COVID-
19 loss mitigation procedural safeguards have been sunset by their own
terms, and the COVID-19 Public Health Emergency expired on May 11,
2023. Thus, borrowers and servicers are no longer utilizing these
safeguards. Moreover, the Bureau proposed a rule on July 24, 2024 (89
FR 60204), that would provide additional flexibility to servicers to
offer streamlined loss mitigation options when borrowers seek payment
assistance. As part of the revised framework, the proposal would have
removed the provisions implemented in response to the COVID-19
pandemic, and the Bureau did not receive public comments on the
proposed removal of those provisions. As part of any future rulemaking,
the Bureau would consider and address comments received in response to
the 2024 proposed rule, including comments related to applying the loss
mitigation lessons learned from the COVID-19 pandemic.
Second, it is the policy of the Bureau to streamline regulatory
requirements to reduce burdens on the American public. The Bureau has
determined that, in light of the end of the COVID-19 pandemic, these
regulations needlessly complicate Regulation X without commensurate
benefits.
Section 1022 Analysis
In developing this rule, the Bureau has considered the potential
benefits, costs, and impacts as required by section 1022(b)(2)(A) of
the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C.
5512(b)(2)(A). This rule does not impose any costs to consumers or
covered persons or have any direct impact on consumers' access to
consumer financial products or services. Further, it has no unique
impact on insured depository institutions or insured credit unions with
less than $10 billion in assets, as described in section 1026(a) of the
CFPA. Finally, it does not have any unique impact on rural consumers.
Legal Authority
The Bureau is issuing this IFR pursuant to its authority under 12
U.S.C. 2617(a), 2506(j)(3), and 2605(k)(1)(E); 12 U.S.C. 5512(b)(1);
and 12 U.S.C. 5532.
List of Subjects in 12 CFR Part 1024
Banks, Banking, Condominiums, Consumer protection, Credit unions,
Housing, Mortgage insurance, Mortgages, National banks, Reporting and
recordkeeping requirements, Savings associations.
Authority and Issuance
For the reasons set forth in the preamble, the Bureau amends
Regulation X, 12 CFR part 1024, as set forth below:
PART 1024--REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X)
0
1. The authority citation for part 1024 continues to read as follows:
Authority: 12 U.S.C. 2603-2605, 2607, 2609, 2617, 5512, 5532,
5581.
Subpart C--Mortgage Servicing
Sec. 1024.31 [Amended]
0
2. Amend Sec. 1024.31 by removing the definition of ``COVID-19-related
hardship.''
0
3. Amend Sec. 1024.39 by:
0
a. Revising paragraph (a); and
0
b. Removing paragraph (e).
The revision reads as follows:
Sec. 1024.39 Early intervention requirements for certain borrowers.
(a) Live contact. Except as otherwise provided in this section, a
servicer shall establish or make good faith efforts to establish live
contact with a delinquent borrower no later than the 36th day of a
borrower's delinquency and again no later than 36 days after each
payment due date so long as the borrower remains delinquent. Promptly
after establishing live contact with a borrower, the servicer shall
inform the borrower about the availability of loss mitigation options,
if appropriate.
* * * * *
0
4. Amend Sec. 1024.41 by:
0
a. Revising paragraphs (c)(2)(i) and (c)(2)(v)(A)(1); and
0
b. Removing paragraphs (c)(2)(vi) and (f)(3).
The revisions read as follows:
Sec. 1024.41 Loss mitigation procedures.
* * * * *
(c) * * *
(2) * * *
(i) In general. Except as set forth in paragraphs (c)(2)(ii),
(iii), and (v) of this section, a servicer shall not evade the
requirement to evaluate a complete loss mitigation application for all
loss mitigation options available to the borrower by offering a loss
mitigation option based upon an evaluation of any information provided
by a borrower in connection with an incomplete loss mitigation
application.
* * * * *
(v) * * *
(A) * * *
(1) The loss mitigation option permits the borrower to delay paying
covered amounts until the mortgage loan is refinanced, the mortgaged
property is sold, the term of the mortgage loan ends, or, for a
mortgage loan insured by the Federal Housing Administration, the
[[Page 20793]]
mortgage insurance terminates. For purposes of this paragraph
(c)(2)(v)(A)(1), ``covered amounts'' includes, without limitation, all
principal and interest payments forborne under a payment forbearance
program made available to borrowers experiencing a COVID-19-related
hardship, including a payment forbearance program made pursuant to the
Coronavirus Economic Stabilization Act, section 4022 (15 U.S.C. 9056);
it also includes, without limitation, all other principal and interest
payments that are due and unpaid by a borrower experiencing COVID-19-
related hardship. For purposes of this paragraph (c)(2)(v)(A)(1), ``the
term of the mortgage loan'' means the term of the mortgage loan
according to the obligation between the parties in effect when the
borrower is offered the loss mitigation option.
* * * * *
0
5. Amend supplement I by:
0
a. Under Sec. 1024.39--Early Intervention Requirements for Certain
Borrowers, revising 39(a) Live Contact; and
0
b. Under Sec. 1024.41--Loss Mitigation Procedures:
0
i. Revising 41(b)(1) Complete Loss Mitigation Application; and
0
ii. Removing 41(f)(3) Temporary Special COVID-19 Loss Mitigation
Procedural Safeguards and 41(f)(3)(ii)(C) Unresponsive Borrower.
The revisions read as follows:
Supplement I to Part 1024--Official Bureau Interpretations
* * * * *
Subpart C--Mortgage Servicing
* * * * *
Sec. 1024.39 Early Intervention Requirements for Certain Borrowers
39(a) Live Contact.
1. Delinquency. Section 1024.39 requires a servicer to establish or
attempt to establish live contact no later than the 36th day of a
borrower's delinquency. This provision is illustrated as follows:
i. Assume a mortgage loan obligation with a monthly billing cycle
and monthly payments of $2,000 representing principal, interest, and
escrow due on the first of each month.
A. The borrower fails to make a payment of $2,000 on, and makes no
payment during the 36-day period after, January 1. The servicer must
establish or make good faith efforts to establish live contact not
later than 36 days after January 1--i.e., on or before February 6.
B. The borrower makes no payments during the period January 1
through April 1, although payments of $2,000 each on January 1,
February 1, and March 1 are due. Assuming it is not a leap year, the
borrower is 90 days delinquent as of April 1. The servicer may time its
attempts to establish live contact such that a single attempt will meet
the requirements of Sec. 1024.39(a) for two missed payments. To
illustrate, the servicer complies with Sec. 1024.39(a) if the servicer
makes a good faith effort to establish live contact with the borrower,
for example, on February 5 and again on March 25. The February 5
attempt meets the requirements of Sec. 1024.39(a) for both the January
1 and February 1 missed payments. The March 25 attempt meets the
requirements of Sec. 1024.39(a) for the March 1 missed payment.
ii. A borrower who is performing as agreed under a loss mitigation
option designed to bring the borrower current on a previously missed
payment is not delinquent for purposes of Sec. 1024.39.
iii. During the 60-day period beginning on the effective date of
transfer of the servicing of any mortgage loan, a borrower is not
delinquent for purposes of Sec. 1024.39 if the transferee servicer
learns that the borrower has made a timely payment that has been
misdirected to the transferor servicer and the transferee servicer
documents its files accordingly. See Sec. 1024.33(c)(1) and comment
33(c)(1)-2.
iv. A servicer need not establish live contact with a borrower
unless the borrower is delinquent during the 36 days after a payment
due date. If the borrower satisfies a payment in full before the end of
the 36-day period, the servicer need not establish live contact with
the borrower. For example, if a borrower misses a January 1 due date
but makes that payment on February 1, a servicer need not establish or
make good faith efforts to establish live contact by February 6.
2. Establishing live contact. Live contact provides servicers an
opportunity to discuss the circumstances of a borrower's delinquency.
Live contact with a borrower includes speaking on the telephone or
conducting an in-person meeting with the borrower but not leaving a
recorded phone message. A servicer may rely on live contact established
at the borrower's initiative to satisfy the live contact requirement in
Sec. 1024.39(a). Servicers may also combine contacts made pursuant to
Sec. 1024.39(a) with contacts made with borrowers for other reasons,
for instance, by telling borrowers on collection calls that loss
mitigation options may be available.
3. Good faith efforts. Good faith efforts to establish live contact
consist of reasonable steps, under the circumstances, to reach a
borrower and may include telephoning the borrower on more than one
occasion or sending written or electronic communication encouraging the
borrower to establish live contact with the servicer. The length of a
borrower's delinquency, as well as a borrower's failure to respond to a
servicer's repeated attempts at communication pursuant to Sec.
1024.39(a), are relevant circumstances to consider. For example,
whereas ``good faith efforts'' to establish live contact with regard to
a borrower with two consecutive missed payments might require a
telephone call, ``good faith efforts'' to establish live contact with
regard to an unresponsive borrower with six or more consecutive missed
payments might require no more than including a sentence requesting
that the borrower contact the servicer with regard to the delinquencies
in the periodic statement or in an electronic communication. Comment
39(a)-6 discusses the relationship between live contact and the loss
mitigation procedures set forth in Sec. 1024.41.
4. Promptly inform if appropriate.
i. Servicer's determination. It is within a servicer's reasonable
discretion to determine whether informing a borrower about the
availability of loss mitigation options is appropriate under the
circumstances. The following examples demonstrate when a servicer has
made a reasonable determination regarding the appropriateness of
providing information about loss mitigation options.
A. A servicer provides information about the availability of loss
mitigation options to a borrower who notifies a servicer during live
contact of a material adverse change in the borrower's financial
circumstances that is likely to cause the borrower to experience a
long-term delinquency for which loss mitigation options may be
available.
B. A servicer does not provide information about the availability
of loss mitigation options to a borrower who has missed a January 1
payment and notified the servicer that full late payment will be
transmitted to the servicer by February 15.
ii. Promptly inform. If appropriate, a servicer may inform
borrowers about the availability of loss mitigation options orally, in
writing, or through electronic communication, but the servicer must
provide such information promptly after the servicer establishes live
contact. A servicer need not notify a borrower about any particular
loss mitigation options at this time; if appropriate, a
[[Page 20794]]
servicer need only inform borrowers generally that loss mitigation
options may be available. If appropriate, a servicer may satisfy the
requirement in Sec. 1024.39(a) to inform a borrower about loss
mitigation options by providing the written notice required by Sec.
1024.39(b)(1), but the servicer must provide such notice promptly after
the servicer establishes live contact.
5. Borrower's representative. Section 1024.39 does not prohibit a
servicer from satisfying its requirements by establishing live contact
with and, if applicable, providing information about loss mitigation
options to a person authorized by the borrower to communicate with the
servicer on the borrower's behalf. A servicer may undertake reasonable
procedures to determine if a person that claims to be an agent of a
borrower has authority from the borrower to act on the borrower's
behalf, for example, by requiring a person that claims to be an agent
of the borrower to provide documentation from the borrower stating that
the purported agent is acting on the borrower's behalf.
6. Relationship between live contact and loss mitigation
procedures. If the servicer has established and is maintaining ongoing
contact with the borrower under the loss mitigation procedures under
Sec. 1024.41, including during the borrower's completion of a loss
mitigation application or the servicer's evaluation of the borrower's
complete loss mitigation application, or if the servicer has sent the
borrower a notice pursuant to Sec. 1024.41(c)(1)(ii) that the borrower
is not eligible for any loss mitigation options, the servicer complies
with Sec. 1024.39(a) and need not otherwise establish or make good
faith efforts to establish live contact. A servicer must resume
compliance with the requirements of Sec. 1024.39(a) for a borrower who
becomes delinquent again after curing a prior delinquency.
* * * * *
Sec. 1024.41 Loss Mitigation Procedures
* * * * *
41(b)(1) Complete loss mitigation application.
1. In general. A servicer has flexibility to establish its own
application requirements and to decide the type and amount of
information it will require from borrowers applying for loss mitigation
options. In the course of gathering documents and information from a
borrower to complete a loss mitigation application, a servicer may stop
collecting documents and information for a particular loss mitigation
option after receiving information confirming that, pursuant to any
requirements established by the owner or assignee of the borrower's
mortgage loan, the borrower is ineligible for that option. A servicer
may not stop collecting documents and information for any loss
mitigation option based solely upon the borrower's stated preference
but may stop collecting documents and information for any loss
mitigation option based on the borrower's stated preference in
conjunction with other information, as prescribed by any requirements
established by the owner or assignee. A servicer must continue to
exercise reasonable diligence to obtain documents and information from
the borrower that the servicer requires to evaluate the borrower as to
all other loss mitigation options available to the borrower. For
example:
i. Assume a particular loss mitigation option is only available for
borrowers whose mortgage loans were originated before a specific date.
Once a servicer receives documents or information confirming that a
mortgage loan was originated after that date, the servicer may stop
collecting documents or information from the borrower that the servicer
would use to evaluate the borrower for that loss mitigation option, but
the servicer must continue its efforts to obtain documents and
information from the borrower that the servicer requires to evaluate
the borrower for all other available loss mitigation options.
ii. Assume applicable requirements established by the owner or
assignee of the mortgage loan provide that a borrower is ineligible for
home retention loss mitigation options if the borrower states a
preference for a short sale and provides evidence of another applicable
hardship, such as military Permanent Change of Station orders or an
employment transfer more than 50 miles away. If the borrower indicates
a preference for a short sale or, more generally, not to retain the
property, the servicer may not stop collecting documents and
information from the borrower pertaining to available home retention
options solely because the borrower has indicated such a preference,
but the servicer may stop collecting such documents and information
once the servicer receives information confirming that the borrower has
an applicable hardship under requirements established by the owner or
assignee, such as military Permanent Change of Station orders or
employment transfer.
2. When an inquiry or prequalification request becomes an
application. A servicer is encouraged to provide borrowers with
information about loss mitigation programs. If in giving information to
the borrower, the borrower expresses an interest in applying for a loss
mitigation option and provides information the servicer would evaluate
in connection with a loss mitigation application, the borrower's
inquiry or prequalification request has become a loss mitigation
application. A loss mitigation application is considered expansively
and includes any ``prequalification'' for a loss mitigation option. For
example, if a borrower requests that a servicer determine if the
borrower is ``prequalified'' for a loss mitigation program by
evaluating the borrower against preliminary criteria to determine
eligibility for a loss mitigation option, the request constitutes a
loss mitigation application.
3. Examples of inquiries that are not applications. The following
examples illustrate situations in which only an inquiry has taken place
and no loss mitigation application has been submitted:
i. A borrower calls to ask about loss mitigation options and
servicer personnel explain the loss mitigation options available to the
borrower and the criteria for determining the borrower's eligibility
for any such loss mitigation option. The borrower does not, however,
provide any information that a servicer would consider for evaluating a
loss mitigation application.
ii. A borrower calls to ask about the process for applying for a
loss mitigation option but the borrower does not provide any
information that a servicer would consider for evaluating a loss
mitigation application.
4. Although a servicer has flexibility to establish its own
requirements regarding the documents and information necessary for a
loss mitigation application, the servicer must act with reasonable
diligence to collect information needed to complete the application. A
servicer must request information necessary to make a loss mitigation
application complete promptly after receiving the loss mitigation
application. Reasonable diligence for purposes of Sec. 1024.41(b)(1)
includes, without limitation, the following actions:
i. A servicer requires additional information from the applicant,
such as an address or a telephone number to verify employment; the
servicer contacts the applicant promptly to obtain such information
after receiving a loss mitigation application;
ii. Servicing for a mortgage loan is transferred to a servicer and
the borrower makes an incomplete loss mitigation application to the
transferee servicer after the transfer; the transferee
[[Page 20795]]
servicer reviews documents provided by the transferor servicer to
determine if information required to make the loss mitigation
application complete is contained within documents transferred by the
transferor servicer to the servicer; and
iii. A servicer offers a borrower a short-term payment forbearance
program or a short-term repayment plan based on an evaluation of an
incomplete loss mitigation application and provides the borrower the
written notice pursuant to Sec. 1024.41(c)(2)(iii). If the borrower
remains in compliance with the short-term payment forbearance program
or short-term repayment plan, and the borrower does not request further
assistance, the servicer may suspend reasonable diligence efforts until
near the end of the payment forbearance program or repayment plan.
However, if the borrower fails to comply with the program or plan or
requests further assistance, the servicer must immediately resume
reasonable diligence efforts. Near the end of a short-term payment
forbearance program offered based on an evaluation of an incomplete
loss mitigation application pursuant to Sec. 1024.41(c)(2)(iii), and
prior to the end of the forbearance period, if the borrower remains
delinquent, a servicer must contact the borrower to determine if the
borrower wishes to complete the loss mitigation application and proceed
with a full loss mitigation evaluation.
5. Information not in the borrower's control. A loss mitigation
application is complete when a borrower provides all information
required from the borrower notwithstanding that additional information
may be required by a servicer that is not in the control of a borrower.
For example, if a servicer requires a consumer report for a loss
mitigation evaluation, a loss mitigation application is considered
complete if a borrower has submitted all information required from the
borrower without regard to whether a servicer has obtained a consumer
report that a servicer has requested from a consumer reporting agency.
* * * * *
Russell Vought,
Acting Director, Consumer Financial Protection Bureau.
[FR Doc. 2025-08643 Filed 5-15-25; 8:45 am]
BILLING CODE 4810-AM-P