What to know about end of pandemic-era homeowner protection programs

A new letter to credit unions from the NCUA provides lenders and mortgage servicers with information for compliance with changes to certain pandemic-era protection programs.

“The NCUA is concerned about the financial well-being of credit unions and their members,” the letter states. “While some of these pandemic protection programs may be ending, there are resources and new programs available to help ease the impact of the COVID-19 pandemic on homeowners.”

Deadline to grant CARES Act forbearance ends Sept. 30, 2021
Borrowers who have not previously been in forbearance have until Sept. 30, 2021 to request assistance. When the forbearance period ends, borrowers will need to work with their credit union mortgage servicers to establish a repayment plan for missed payments.

The FHFA in conjunction with the CFPB and agencies that provide federally backed mortgages have announced a series of programs to help borrowers exiting forbearance to stay in their homes. These programs require, where agencies have the authority and depending on homeowners’ financial conditions, or encourage mortgage servicers to offer borrowers new payment reduction and loan modification options that can help homeowners remain in their homes.

Credit unions can continue to grant CARES Act loan modifications until Jan. 1, 2022
For non-federally backed mortgages, the CARES Act allows credit unions to modify a loan, including forbearance, without designating the modification as a troubled debt restructuring if it meets the following criteria:

  • the loan was in existence before Dec. 31, 2019;
  • the modification is related to COVID-19;
  • the borrower was less 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.

Foreclosure moratorium expired July 31, 2021
To ease the burden on homeowners with the end of this protection program, whether their mortgage is federally backed or not, 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.

Eviction moratorium expires Sept. 30, 2021
Similar to the forbearance protection, the CARES Act also mandates that mortgage servicers may not evict homeowners from a property with a federally backed mortgage that has been foreclosed. Credit union mortgage servicers should be aware of this restriction, which aims to keep people in their homes even after the home has been foreclosed.

Other homeowner and renter assistance programs
Credit unions should refer to the U.S. Treasury’s website, which includes information about the American Rescue Plan, which provides almost $10 billion to help struggling homeowners.

Read the full letter on the NCUA website. The letter also includes FAQs related to the end of forbearance and the forclosure/eviction moratorium.

Leave a Reply