USFN Report: Navigating the Always Shifting Landscape

Prioritize Compliance in Adapting to Change and Adjusting Operations

As published in the 2025 USFN Spring Report

BY ADAM GROSS, ESQ. | GROSS POLOWY, LLC | USFN MEMBER (NJ, NY, PA)Cover FeatureFeatured

CONTRIBUTOR SARA TUSSEY, ESQ. | ROSENBERG & ASSOCIATES, LLC^∗ | USFN MEMBER (DC, MD, VA)

Mortgage servicers must stay vigilant as regulatory requirements governing their operations continue to evolve. This dynamic landscape was the focus of a general session at the April USFNdustry Forum, titled Navigating the Always Shifting Landscape of Mortgage Servicing and Adapting to New Requirements: Loss Mitigation, Regulations, and the Impact of Federal and State Changes.

An expert panel featuring USFN Members Adam Gross (Gross Polowy, LLC), Ryan Bourgeois (BDF Law Group), Lisa Lee (McCalla Raymer Leibert Pierce, LLP), and servicer Beth Northrop-Day (U.S. Bank) explored key developments impacting the industry. Their discussion included changes to HUD’s “Face-to-Face” requirements and updates from the Consumer Financial Protection Bureau (CFPB).

This article highlights the panel’s insights, offering a summary of the changes, their implications for day-to-day operations, and what mortgage servicers need to know to remain compliant.

HUD’s Modernized Engagement Requirements

The U.S. Department of Housing and Urban Development (HUD) has significantly revised its requirements for how servicers engage with borrowers in default—particularly in the area of loss mitigation prior to foreclosure. A central update is the expansion of acceptable communication methods. Under the new rules, mortgage servicers can now use electronic or remote communication — such as phone calls or video conferences—in place of previously mandated in-person meetings.

This modernization, effective January 1, 2025, reflects both technological advancements and borrower preferences for more flexible and accessible communication. The requirement for an in-person meeting is eliminated, and the updated policy extends to all borrowers in default, including those living more than 200 miles from a servicer’s office or who no longer reside at the mortgaged property.

Servicers are now required to make reasonable efforts to contact and engage with borrowers within 61 days of delinquency. This timely engagement is intended to support loss mitigation and reduce the risk of foreclosure.

Compliance Timeline and Interim Guidance

To support the transition, HUD has extended the compliance deadline for certain provisions to July 1, 2025. From January 1 to June 30, 2025, interim procedures will allow servicers to continue using their current methods while preparing to adopt remote communication fully.

During this period, servicers are encouraged to assess and upgrade their technology platforms, review internal policies, and implement staff training programs to ensure a seamless transition. These interim guidelines are designed to offer operational flexibility without compromising compliance.

Evolving Role of the CFPB

Under the current administration, the CFPB appears to be shifting toward a more industry-friendly regulatory posture. Recent leadership changes have emphasized reducing regulatory burdens and encouraging self-regulation.

Although enforcement may seem less aggressive, mortgage servicers must remain diligent. The CFPB still enforces critical regulations around loan modifications, foreclosure practices, and loss mitigation. Violations can result in significant penalties, regardless of the broader regulatory tone.

Staying current with CFPB guidance and maintaining strong compliance protocols are essential. Even as complexity may be reduced, the expectation for ethical and compliant servicing remains high.

Navigating State-Level Requirements

In addition to federal regulations, mortgage servicers must monitor changes at the state level. In some cases, state regulations may impose stricter requirements than federal law — particularly regarding borrower communications, foreclosure timelines, and consumer protections.

Servicers operating in multiple jurisdictions must track local legislative updates to ensure full compliance. Proactive monitoring and adaptability are crucial in avoiding legal exposure and maintaining operational consistency.

Adapting to a Shifting Landscape

Mortgage servicers should continue to monitor the shifts in Washington and how they may affect the mortgage industry. The only thing we know for sure is that there will continue to be change and that it will most heavily affect HUD, FHFA, and VA. Also, the CFPB seems likely to continue to shift its focus away from enforcement. The proposed amendments to Regulation X are still alive, but the final rule has been derailed and the CFPB would likely have to initiate a new proposal and comment period to implement a final rule at this time.

Looking Forward

Mortgage servicers must continue to adapt and remain agile in the face of regulatory evolution. Embracing remote engagement tools, responding to shifting enforcement trends, and preparing for both federal and state-level updates are all critical to future success.

By staying proactive, investing in compliance infrastructure, and fostering transparent borrower communication, mortgage servicers can reduce risk and position themselves for long-term sustainability in an ever-changing regulatory environment.