U.S. regulators will not penalize mortgage firms if they miss regulatory deadlines for communicating with borrowers while fielding an unprecedented surge in queries due to the novel coronavirus, banking regulators said
U.S. bank supervisors will not penalize mortgage companies if they miss regulatory deadlines for communicating with borrowers while fielding an unprecedented surge in queries due to disruptions caused by the novel coronavirus, banking regulators said on Friday.
The banking agencies will effectively waive rules requiring mortgage lenders and servicers respond to borrowers within a specific time frame on matters such as receiving incomplete applications or certain other notices, the U.S. banking agencies said in a statement.
The interagency statement confirmed an earlier Reuters report.
“The agencies do not intend to take supervisory or enforcement action against mortgage servicers for delays” in certain communications with borrowers, provided the firms make “good faith efforts” to provide the notices within a reasonable timeframe, the statement said.
Lenders have been inundated with calls and queries from borrowers unable to make payments after losing jobs due to widespread business shutdowns aimed at slowing the spread of the virus. Bank operations are also struggling with much of their staff working from home.
That has made it harder for mortgage companies to comply with laws that guard against abusive lending practices, including the Truth in Lending Act and the Real Estate Settlement Procedures Act, which set stringent turnaround times for responding to borrowers on a range of issues.
The relief would be temporary and should address worries on the part of banks that they would face penalties or other enforcement action if they failed to meet the regulatory deadlines, a source at one of the banking agencies said. This will allow banks to focus on critical queries on repayment relief and other forbearance issues.
Big banks such as JP Morgan Chase & Co and Wells Fargo & Co have promised assistance on loans in recent weeks, though some U.S. borrowers seeking reprieve have said they were not getting the help they expected.
Many banks on Friday also had to reallocate staff to assist a flood of small business customers racing to secure a $350 billion pot of government rescue loans.
The easing of the enforcement around delays will “facilitate mortgage servicers’ ability to place consumers in short-term payment forbearance programs,” the Federal Reserve Board and other banking agencies said in the statement.
Banking regulators around the world have been offering breaks and easing restrictions to prevent liquidity issues as the coronavirus pandemic grips the global economy. They have eased capital requirements, offered relief on new accounting requirements and have urged banks to get back into small-dollar lending.
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