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12.3.3.3 Approval of CARES Act Forbearance Request Is Mandatory

Significant Law Change

Upon request of the borrower with a federally-backed loan, forbearance “shall” be granted. As described above, the CARES Act, which was drafted quickly in response to the pandemic, includes two sections with slightly different language describing forbearance from the borrower and the servicer’s perspective. Critically, both sections use the word “shall” when describing granting forbearance requests. The CARES Act gives servicers no discretion to deny the forbearance as long as the borrower makes the required attestation within the relevant period.

While there are no remedies in the CARES Act for non-compliance, advocates should highlight the mandatory language of the CARES Act in any state or federal claims based on servicer non-compliance. As described above, borrowers should consider RESPA Notices of Error in response to any improper denial of forbearance.36 State-based UDAP or common law claims may be available.37 In addition, many form mortgages include language stating that the contract is subject to requirements of applicable federal law.38 Although courts have closely scrutinized claims based on this contract provision,39 the mandatory nature of the CARES and the obligation it imposes on servicers to forbear payments may make it the type of law courts would enforce through the contract.

Footnotes

  • 36 See § 3.3.3, supra.

  • 37 See § 10.5, supra, for a discussion of loss mitigation related claims.

  • 38 Page v. JP Morgan Chase Bank, 605 Fed. Appx. 272, 275 (5th Cir. 2015). See also § 3.12.6, supra.

  • 39 Buford v. Ocwen Loan Servicing, L.L.C., 2018 WL 6790656, at *7 (E.D. Va. Nov. 2, 2018), adopted, 2018 WL 6617646 (E.D. Va. Dec. 18, 2018).