This summer, the CFPB issued its long-awaited proposed rule amending the mortgage servicing rules under Regulation X, with a focus on loss mitigation procedures, foreclosure protections, and language access. These changes were previewed by the CFPB as a means to streamline, and add flexibility to, the loss mitigation process, in light of the industry's successful efforts during the COVID-19 pandemic. However, the CFPB's proposal also significantly expands borrower protections during the loss mitigation process, creates extensive new operational challenges for servicers, and leaves many concerning questions based on the proposed language.

The mortgage servicing industry responded by submitting numerous comment letters, appropriately voicing a range of concerns with the proposed changes. We now await further action from the CFPB.

On this episode, Ballard Spahr lawyers discuss the regulatory and litigation impacts of the proposed rule, including:

1.         Detailed analysis of the proposed changes

2.         Potential approaches to loss mitigation, under the revised scheme

3.         Practical impacts on loss mitigation and foreclosure from an operational, cost, and liability standpoint

4.         Specific pain points under the proposed language, and topics requiring clarification, refinement, or pushback

5.         Language access requirements, and the impact from an operational, cost, and liability standpoint

6.         Implications of the rulemaking in a post-Chevron world

Rich Andreano, a Partner and Leader of Ballard Spahr's Mortgage Banking group, moderates today's episode, and he is joined by Reid Herlihy and Matt Morr, Partners in the Group.