In this report, we assess today’s HFSC Oversight and Investigations Subcommittee hearing on mortgage servicing.  Democrats previewed their forbearance demands for the next COVID package.  Full Committee Chairwoman Waters (D-CA) reiterated the need for HEROES Act provisions expanding forbearance protections to private mortgages, automatically placing certain borrowers into forbearance, and prohibiting balloon payments (see Client Report RESCUE73).  However, she now also demands new sanctions on servicers that offer shorter forbearance periods and do not clearly disclose that balloon payments are not required.  Rep. Waters also asked whether additional legislation is needed to encourage loan modifications when forbearance ends, with Rep. Lynch (D-MA) supporting an investor liability safe harbor for servicers that modify private mortgages.

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