Written By JiJi Bahhur, Regulatory Compliance Counsel
Several Agencies, including the Consumer Financial Protection Burean (CFPB) and the National Credit Union Administration (NCUA), issued guidance to mortgage servicers concerning military homeowners with Permanent Change of Station (PCS) orders. The guidance addresses mortgage service practices that the Agencies feel may pose risks to homeowners who have informed the servicer that they have received military PCS orders. What the guidance does not do is obligate servicers to offer any particular loss mitigation programs.
A PCS order would require a military homeowner to move to a new duty station. Potentially, this can leave the homeowner in a predicament: a continued obligation to make payments to the mortgage after relocation. When the military homeowner notifies the mortgage servicer of the PCS order, the servicer follows certain practices or provides certain options to the military homeowner. Of particular concern to the Agencies are those practices that may mislead or harm homeowners with PCS orders. The guidance provides the following concerns as potentially misleading or harmful:
- Failing to provide homeowners with PCS orders who notify their servicers of such orders with accurate, clear, and readily understandable information about available assistance options for which the homeowner may qualify based on the information known to the mortgage servicer.
- Asking homeowners with PCS orders to waive their legal rights under the Servicemembers Civil Relief Act (SCRA) or any other law as a prerequisite to the mortgage servicer either providing information to the homeowner about available options or evaluating the homeowner’s eligibility for assistance.
- Advising homeowners with PCS orders who are current on their loans and able to make the monthly payment to intentionally skip making payments in order to create the appearance that they are having financial difficulties in order to obtain assistance for which they would not otherwise qualify.
- Failing to provide a reasonable means for homeowners with PCS orders to obtain information on the status of their request for assistance.
- Failing to timely communicate the servicer’s decision regarding requests for assistance from homeowners with PCS orders and failing to include an explanation of the reason for the denial, where required, so that the homeowner has an opportunity to address any deficiencies, if applicable.
To address potential concerns, the guidance goes on to state that mortgage servicers should ensure that its employees are properly trained on the available options for homeowners with PCS orders. Further, there should be mortgage servicing policies and procedures in place to address this situation and to ensure compliance with the guidance.
Some other links of interest on the topic:
- Prepared Remarks by Holly Petraeus, CFPB’s Assistant Director for the Office of Servicemember Affairs