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Mortgage Servicing and Loan Modifications: 12.3.5.2.3 Eligibility for Freddie Mac COVID-19 deferral

Freddie Mac’s initial option for addressing forborne payments is its COVID-19 deferral program.350 To access this option, borrowers must have their COVID-19 hardship identified before November 1, 2023, and the final evaluation for the deferral must be completed before November 1, 2024.351 Borrowers with hardships identified on or after November 1, 2023, may have access to the standard deferral described in Chapter 7.

Mortgage Servicing and Loan Modifications: 12.3.6.4.1 Generally

HUD has provided specific options for borrowers facing long-term, COVID-19-related hardships and has amended them several times during the pandemic. On April 1, 2020, HUD issued Mortgagee Letter 2020-06 that implemented the COVID-19 Standalone Partial Claim for borrowers with pandemic related hardships who fall behind on their loans. In response to consumer advocates, HUD expanded the options through Mortgagee Letter 2020-22 on July 8, 2020 and provided further updates through Mortgagee Letter 2021-05 on February 16, 2021.

Mortgage Servicing and Loan Modifications: 12.3.6.4.3 COVID-19 Standalone Partial Claim

The COVID-19 Standalone Partial Claim allows owner-occupant borrowers who can afford their pre-forbearance monthly payments to become current with a zero percent interest loan from HUD that is recorded as a mortgage and is generally payable at the end of the loan term. The partial claim brings their loan current by covering full principal, interest, taxes, and insurance (PITI) payments. It is the same as a standard FHA partial claim except that borrowers do not need to submit financial information to access it.

Mortgage Servicing and Loan Modifications: 12.3.6.4.4 COVID-19 Recovery Modification

If the owner-occupant borrower indicates that a payment pursuant to the COVID-19 Standalone Partial Claim is not affordable, the servicer should then evaluate the borrower for the COVID-19 Recovery Modification (Recovery Modification).397 The Recovery Modification combines a loan modification and a partial claim in order to target a 25% reduction in the borrower’s monthly principal and interest payment from its pre-hardship level.398 The targeted payment reduction makes the Recovery Modification

Consumer Bankruptcy Law and Practice: 2.5.7 Personal Injury Claims and Other Causes of Action

There can sometimes be significant issues concerning whether a cause of action accrued prior to the bankruptcy petition and therefore is the property of the estate. These issues have come to the fore when debtors and trustees have been contacted long after the bankruptcy case and informed that the debtor has a right to a class action settlement payment, often in cases involving defective medical devices. In some cases, debtors have received these settlement payments even though they have suffered no injury.

Consumer Bankruptcy Law and Practice: 5.3.3.2 Property

Among the types of property clients often forget in reporting their assets are long-dormant accounts with savings institutions, such as banks and credit unions. Especially in the case of the latter, the client may not have access to a share balance (deposit) that was required to secure a loan. Nonetheless, such a balance belongs to the client and may become important to the case.

Student Loan Law: 3.2 Student Loan Payment Pause and Flexibilities for Returning to Repayment

In response to the unpreceded COVID-19 national emergency, the obligation to make payments on eligible federal student loans (including all Direct Loans and Department-held FFEL Program loans and Perkins Loans) was temporarily suspended and interest rates were temporarily set to 0%. This emergency relief—often referred to as the student loan payment pause (payment pause)—began on March 13, 2020 and ended on August 31, 2023.

Consumer Class Actions: 1.7.2.4 Mass Arbitration

When both class actions in court and in arbitration are foreclosed, an increasingly common alternative to obtain relief for a large number of consumers or workers is to proceed with a mass arbitration. Mass arbitration involves numerous individual claimants bringing largely identical individual arbitration claims against the same defendant, at the same time, before the same arbitration provider, and through the same lawyers.

Unfair and Deceptive Acts and Practices: 6.7.5.5 Meeting UDAP Statutes’ Injury Requirements in Loan Modification Cases

Most UDAP statutes allow consumers to sue only if the unfair or deceptive practice has caused the consumer a loss or injury, and some require that the consumer have lost money or property.429 In the loan modification context, some courts have required overly elaborate proof that the consumer has met this initial standing-type requirement, transforming it into a requirement of proof of damages.

Unfair and Deceptive Acts and Practices: 6.9.1.2 Misrepresentation or Nondisclosure of Interest Rate

Failing to comply with the interest rate disclosure provisions of the Truth in Savings Act can be a UDAP violation.567 Misrepresentations regarding the interest that will be paid on a deposit account are also UDAP violations.568 It is deceptive for a bank to fail to pay interest on an interest-bearing account and then refuse, upon discovery, to correct the failure.569 A bank may also violate the UDAP statute by fail

Unfair and Deceptive Acts and Practices: 6.9.5 Live Check Solicitations

Many consumers become obligated to pay for goods or services when they deposit or cash checks they receive in the mail from a business. The checks are payable to the consumer for a small amount of money, even though the business owes no money to the consumer. The business then takes the position that depositing or cashing the check constitutes an agreement by the consumer to enter into a contract to purchase goods or services or to take out a loan.

Unfair and Deceptive Acts and Practices: 6.10.11 Unfair and Deceptive Means of Obtaining Default Judgments and Other Litigation Misconduct

Another unfair practice is “sewer service,” obtaining a default judgment because the defendant does not actually receive the summons.723 When a debtor contacts a creditor after receiving a summons and agrees to make payment, and the creditor tells the debtor to ignore the summons, it is unfair for the creditor not to file a notice of discontinuance but instead to obtain a default judgment.724 A court has also allowed a UDAP action to proceed challenging default judgments obtained through affidav