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The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) were passed in March 2020 to assist consumers experiencing financial hardship due to COVID-19 and allowed them to obtain forbearance of mortgage payments for up to 360 days. Agreeing to forbear upon mortgage payments in lieu of foreclosure is a loss mitigation form that directly implicates certain federal mortgage servicing laws. Regulation X, the implementing legislation for the Real Estate Settlement Procedures Act (RESPA), contains detailed procedural requirements that mortgage servicers must abide by when interacting with borrowers in connection with loss
mitigation applications and negotiations. The CARES Act and the loss mitigation rules in Regulation X have posed some challenges for servicers and their credit reporting requirements.

Credit Reporting and Scores Under the CARES Act
To protect consumers against being reported as delinquent if they qualify and utilize the benefits under the CARES Act, creditors must adjust how they report accounts that have been modified.

The law requires creditors to report any account that has a payment accommodation applied to it as current to the credit bureaus—if the account was current when the accommodation was made. Here are two scenarios under the CARES Act:

● If the loan is considered current (not past due) when the creditor modifies repayment, the creditor must report the consumer current to the credit bureaus.
● If the loan is considered delinquent (past due) when the creditor modifies repayment, the consumer’s status will continue to show as delinquent until the account is brought back into good standing. Once the consumer brings the account current, the creditor must report the status as current to the credit bureaus.

According to the new law, an "accommodation"; could be an agreement to make a partial payment put a loan in forbearance, modify a loan, or offer any other relief. The CARES Act protections require creditors to follow these guidelines for all agreements made between January 31, 2020, through either July 25, 2020 (120 days after March 27, 2020, when the law was enacted) or 120 days from the date the COVID-19 national emergency is declared over.