CFPB “Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act” (Reg X)

CFPB did not finalize the initially proposed pre-foreclosure requirements; instead, the final rule provides temporary and a more tailored procedural protection to minimize avoidable foreclosures. Final § 1024.41(f)(3) requires a servicer to ensure that one of three temporary procedural safeguards have been met before making the first notice or filing because of delinquency:

• the borrower submitted a completed loss mitigation application and § 1024.41(f)(2) permits the servicer to make the first notice or filing;
• the property securing the mortgage loan is abandoned under state law; or
• the servicer has conducted specified outreach and the borrower is unresponsive.

The CFPB proposes to refer to these protections as Temporary Special COVID-19 Loss Mitigation Procedural Safeguards. These safeguards are applicable only if

• the borrower’s mortgage loan obligation became more than 120 days delinquent on or after March 1, 2020; and
• the statute of limitations applicable to the foreclosure action being taken in the laws of the State where the property securing the mortgage loan is located expires on or after January 1, 2022.

​This temporary provision will expire on January 1, 2022, meaning that the procedural safeguards in § 1024.41(f)(3) would not be applicable if a servicers makes the of the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process on or after January 1, 2022.
 
The final rule is effective on August 31, 2021.

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