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We have started a loan payment deferral program in response to COVID-19. Our core processor produces our monthly periodic statements for mortgage loans as required by reg z for a large servicer. The core processor is not able to produce monthly statements with the payment deferral program because no payment will be due. Would this possibly be acceptable to not provide monthly statements during the deferral period? Would this possibly fall under any of the FDIC/CFPB’s guidance on easing credit restrictions/not criticizing banks for helping customers with COVID-19?
When you look to 41(d)-4 and 41(d)(2)-2 it seems to imply statements will continue during the temporary loss mitigation program timeframe. But this could be assuming a situation when the payment is simply reduced and not deferred. In 41(b) regarding the timing of statements it says:
1026.41(b) Timing of the periodic statement. The periodic statement must be delivered or placed in the mail within a reasonably prompt time after the payment due date or the end of any courtesy period provided for the previous billing cycle.
Official Interpretation
41(b) Timing of the periodic statement.
1. Reasonably prompt time. Section 1026.41(b) requires that the periodic statement be delivered or placed in the mail no later than a reasonably prompt time after the payment due date or the end of any courtesy period. Delivering, emailing or placing the periodic statement in the mail within four days of close of the courtesy period of the previous billing cycle generally would be considered reasonably prompt.2. Courtesy period. The meaning of “courtesy period” is explained in comment 7(b)(11)-1.
When you look at 7(b)(11)-1 it mentions the due date per the legal agrement. You may be able to rely on the a modification as the legal agreement and the dates reflected in there could possibly determine your periodic statement requirements.
When you look to 41(d)-4 and 41(d)(2)-2 it seems to imply statements will continue during the temporary loss mitigation program timeframe.
This is one of those situations where I think it could be argued either way. Talk with your regulator and legal counsel as you are making these decisions so no one is surprised later.
It appears that a loan deferral program would benefit your customer. It also appears that the lack of availability of a periodic statement could prevent implementation of the program.
Stopping the delivery of periodic statements does not appear to fall under any regulatory guidance on easing credit restrictions/not criticizing banks for helping customers with COVID-19. If anything the borrower’s need for a periodic statement is likely greater during the time of a deferral than at any other time.
Robin points out a potential loophole above. Periodic statements must be delivered within a reasonably prompt time after the payment due date. If the payment due date is deferred does that extend the reasonably prompt period for sending the statements. While this could be a solution to your dilemma I agree with Robin, talk with your regulator and legal counsel as you are making these decisions.
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