Pub. 15 2020-2021 Issue 2

WWW.NEBANKERS.ORG 24 COMPLIANCE ALLIANCE T HE COVID-19 PANDEMIC HAS CHANGED AMERICAN LIFE AS WE know it. As the country continues to deal with the health crisis, the effects of containment measures ripple through the American economy. Unemployment remains high as state economies expand and contract in inverse proportion to the virus’s spread. Regulators are in an arms race with rapidly changing markets, forcing banks to adapt to an ever-changing regulatory landscape. Even as we struggle to deal with the im - mediate concerns, we know the effects of this pandemic will be with us for some time. Economic shocks will continue to rever - berate and play out in the housing markets around the country. As we shift into the next phase of operating in the pandemic and consider what options exist to help struggling mortgage borrowers, we should take note of the status of the expansive mortgagor protections passed by Congress, federal agencies, and other government authorities. Protection for Federally Backed Mortgage Loans In the early days of the pandemic, Congress passed the Coro- navirus Aid, Relief, and Economic Security (“CARES”) Act. One of the primary sections of this law established a 60-day mora - torium on foreclosure proceedings against homeowners with federally-backed mortgage loans. The CARES Act’s mortgage foreclosure moratorium applied to single-family residential mortgage loans secured, guaranteed, or made by FHA, USDA, VA, or FannieMae or FreddieMac. Originally scheduled to expire at the end of June, the various agencies extended themoratorium on foreclosures and evictions until at least August 31, 2020. The CARES Act also granted federally backed mortgage loan consumers, experiencing financial hardship related to the CO - VID–19 pandemic, the right to request sixmonths of forbearance (with an option of six additional months), regardless of delinquen - cy status. Congress prohibited servicers from charging any fees related to this forbearance. Mortgage delinquency status is frozen in place during forbearance, even if the bank suspends payments during the forbearance. As it stands today, customers can request forbearance under the CARES Act until the earlier of the end of 2020, or the end-date of the national emergency concerning the novel coronavirus disease outbreak declared by the president on March 13, 2020, under the National Emergencies Act. State and Local-level Protection Many state and local authorities enacted policies to protect mortgage borrowers and renters. The details of these state and local foreclosure bans vary. Banks should refer to the official websites for their state and local governments to assess the scope and requirements of applicable prohibitions. While effective dates vary widely, many of these protections remain in effect until respective governors lift statewide emergency declarations. Private loans The CARES Act provided no relief for loans that are not federally-backed. Banks should refer to the appropriate investor guidelines for mortgages sold to private investors. Banks should refer to guidance fromits regulators concerning their expectations regarding non-federally-back mortgage loans held in portfolio. Foreclosure Protection: Where are We Now? Chris W. Bell, Associate General Counsel at Compliance Alliance