Compliance Journal June 2025
Special Focus Regulation X COVID-19 Emergency Mitigation Protections Rescinded The Bureau of Consumer Financial Protection (CPFB) issued an interim final rule to rescind the final rule titled, Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (2021 COVID RESPA Rule), Regulation X. The interim final rule is effective July 15, 2025. CFPB rescinded the 2021 COVID RESPA Rule for two reasons. First, the 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.’’ CFPB determined 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 May 11, 2023. Thus, borrowers and servicers are no longer utilizing these safeguards. Moreover, CFPB proposed a rule in July 2024 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. CFPB stated it did not receive comments on the proposed removal of those provisions. As part of any future rulemaking, CFPB stated it 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, CFPB stated it had determined that, in light of the end of the COVID-19 pandemic, the COVID-19 related regulations needlessly complicate Regulation X without commensurate benefits. Revisions to Regulation X Under the interim final rule, the following revisions have been made to Regulation X: • •
Section 1024.31, Definitions: o Amended to remove the definition of “COVID-19 Related Hardship.” Section 1024.39, Early Intervention Requirements for Certain Borrowers: o Paragraph (a) regarding Live Contact amended to remove the reference within to paragraph (e) regarding Temporary COVID-19 Related Live Contact. o Paragraph (e) Temporary COVID-19 Related Live Contact removed.