Three years after it began, the presidentially declared COVID-19 national emergency is officially over. On April 10, 2023, President Biden signed H. J. Res. 7, officially ending the COVID-19 national emergency a month earlier than anticipated. For mortgage servicers who had been led to believe that the national emergency would remain in place for another month, this represents yet another curveball in a long line of last-minute, pandemic-related changes. When President Biden last extended the emergency on February 10, 2023, he indicated that he “anticipate[d] terminating the national emergency concerning the COVID-19 pandemic on May 11, 2023.” In reliance upon the anticipated May 11 end date, the mortgage servicing industry promptly began developing plans to alter communications and processes related to COVID-19 relief programs that can only be offered so long as the national emergency is in effect.
H. J. Res. 7, which immediately ends the COVID-19 national emergency that was originally declared by then-President Trump in 2020 and continued by President Biden in 2021, 2022, and 2023, all pursuant to the National Emergencies Act, passed the House of Representatives on February 1, 2023, after being introduced by Rep. Paul Gosar (R-AZ). It then passed the necessary Senate vote on March 29, 2023, and was presented to President Biden on April 5, 2023, for his signature or veto. Under the law, a president has 10 days, excluding Sundays, to sign or veto a bill beginning at midnight on the day it is presented. Therefore, President Biden theoretically could have waited until Monday, April 17, 2023, to take action with respect to the joint resolution. White House officials previously stated that, while “[t]he President strongly opposes H. J. Res 7 . . . [i]f this bill comes to his desk,  he will sign it.” And that is what he did, a mere five days after it landed on his desk.
Many thought that the president would wait until the last possible opportunity to sign H. J. Res. 7, given that the White House also indicated that, even though the president was committed to signing the joint resolution, “the administration [would] continue working with agencies to wind down the national emergency with as much notice as possible to Americans who could potentially be impacted.”
With the national emergency officially over, the mortgage servicing industry is now forced to accelerate any previously anticipated timelines related to COVID-19 relief options. For mortgage servicers, the end of the national emergency means that certain COVID-19 relief loss mitigation programs, including forbearance, will cease being available for certain agency loans. That means that evaluation hierarchies and waterfalls will need to be modified, as well as any consumer-facing communication materials that describe available programs, such as scripting, letter templates, and websites. Among other applicable requirements that may be implicated by the end of the national emergency and these changes, Regulation X requires that servicers maintain policies and procedures that ensure they can:
- Provide accurate information regarding loss mitigation options available to a borrower from the owner or assignee of the borrower’s mortgage loan;
- Identify with specificity all loss mitigation options for which borrowers may be eligible pursuant to any requirements established by an owner or assignee of the borrower’s mortgage loan; and
- Properly evaluate a borrower who submits an application for a loss mitigation option for all loss mitigation options for which the borrower may be eligible pursuant to any requirements established by the owner or assignee of the borrower’s mortgage loan.
The end of the COVID-19 national emergency will have to be immediately incorporated into relevant policies and procedures and all related communication materials to fully comply with the above-referenced obligations. Although we knew the national emergency was going to end at some point, changing the end date from what had been anticipated and moving it up without much advance notice will create risk for many servicers across the country. Whether a servicer has to now change the timing of already-existing change management plans or scramble to develop a new change management plan, a new element of risk has been introduced either way. Mortgage servicers should immediately ensure that they have addressed all necessary changes and have incorporated the end of the national emergency.