Student Borrower Protection Center Memo to the Financial Services Industry: Your Pandemic Payment Relief Playbook Violates the Law
As servicers across the consumer finance industry struggle to adapt and respond to the heightened need for assistance caused by the coronavirus crisis, it has become clear that their strategy of implementing payment relief and other borrower protections on a case-by-case basis is unworkable and likely violates a range of federal and state consumer financial laws.
These problematic practices resemble breakdowns across the mortgage industry during the last crisis– abuses that forced millions of families to lose their homes, despite promises of relief made by lenders and servicers.
With servicers unable to properly receive and evaluate borrower requests, many are now engaging in unfair and deceptive practices. Their actions now are setting the stage for future litigation.
The following memo explains why servicers should automatically implement payment relief and protections for distressed borrowers across their entire loan portfolios. Immediate action by servicers can protect these companies against litigation risk and help borrowers avoid distress and default.Servicing-in-the-Time-of-Coronavirus-FINAL