A&B Abstract:

In the wake of the recent earthquakes in Puerto Rico, the Puerto Rico Office of the Commissioner of Financial Institutions (“OCFI”) released Circular Letter No. CFI-2020-01 (the “Circular Letter”). The Circular Letter imposes weekly and monthly reporting requirements on all Puerto Rico licensed mortgage lenders, mortgage servicers, Home Equity Conversion Mortgage servicers, reverse mortgage servicers, and all financial institutions acting as mortgage servicers (collectively “Mortgage Servicers”) for specific zip codes and “persons affected by the earthquake” in Puerto Rico. Significantly, the Circular Letter does not include a deadline for Mortgage Servicers to submit the first monthly report, but it provides that the first weekly report is due by 4:30 P.M. on February 5, 2020, for the week ending January 31, 2020.

Purpose of the Circular Letter

The Circular Letter requires that all Mortgage Servicers report to OCFI on their on-going activities to assist all persons affected by the earthquakes that took place in southern Puerto Rico commencing on December 28, 2019, and which continue as of the date of the Circular Letter, January 31, 2020. Specifically, the OCFI is interested in the efforts undertaken by Mortgage Servicers to help the affected persons to file insurance claims to recover their property losses caused by the earthquakes.

Covered Persons for Reporting

For purposes of the reporting requirement, “persons affected by the earthquake” include “persons who suffered a physical damage to their residence or buildings (whether or not covered by hazard or homeowner’s insurance and/or other type of property insurance), persons who have suffered economic injury or loss attributable to the earthquakes (including, but not limited to, loss of income from employment or business), and persons who have been harmed or suffered injuries from the earthquakes or circumstances or events directly related to the earthquakes, which persons’ principal residence or place of employment or business is located in [the following 17 zip codes in Puerto Rico]”:

• Adjuntas, 00601
• Maricao, 00606
• Arecibo, 00612
• Peñuelas, 00624
• Sabana Grande, 00637
• Ciales, 00638
• Utuado, 00641
• Guánica, 00653
• Guayanilla, 00656
• Hatillo, 00659
• Jayuya, 00664
• Lajas, 00667
• Lares, 00669
• Yauco, 00698
• Ponce, 00730
• Ponce, 00731
• Juana Díaz, 00795

Reporting Requirements

Monthly Reporting Requirement: For all persons affected by the earthquake, Mortgage Servicers must provide a monthly report, for each of the 17 zip-codes listed above, on the OCFI’s “Report of Moratorium Granted Due to Earthquake PR” Form. This form does not appear to be publicly-available on the OCFI’s website. The Circular Letter did not specify when Mortgage Servicers must submit the monthly reports or any associated timing requirement. A conservative reading of the Circular Letter would suggest that the end of the first monthly reporting period would be February 29, 2020, one month after the OCFI released the Circular Letter.

Weekly Reporting Requirement: For all consumer mortgages on properties located in the 17 listed zip-codes, or for persons affected by the earthquake, Mortgage Servicers must provide weekly individual reports by zip-code using the OCFI’s “Mortgage Delinquency Report” Form for the entirety of their portfolio. This form also does not appear to be publicly-available on the OCFI’s website. The Circular Letter states that the first weekly report is due to the OCFI by 4:30 p.m. on Wednesday, February 5, 2020, and all subsequent weekly reports must be submitted the Wednesday after the proceeding week, by 4:30 p.m. Each weekly report must cover all activity Monday-Friday from the previous week.

The Circular Letter specifies that Mortgage Servicers are required to transmit the weekly and monthly reports to the OCFI in electronic form using the corresponding excel forms in the appendix of the Circular Letter. However, the Circular Letter does not provide an email or portal where licensed Mortgage Servicers are supposed to submit their reports.

Takeaways:

Licensed Mortgage Servicers in Puerto Rico are now required to submit a monthly report for mortgage servicing activity taken to help borrowers affected by the recent earthquakes and are required to submit weekly reports for all consumer mortgages located in the 17 zip-codes and for all persons affected by the earthquake. The first weekly report, which shall cover activities undertaken in the week commencing on January 27, 2020, is due tomorrow, February 5, 2019, in electronic format to the OCFI by 4:30 P.M. EST. Going forward, weekly reports are due every Wednesday at 4:30P.M. EST, which must include any relevant activity from the previous week.

Mortgage Servicers that fail to provide their reports to the OCFI in a timely manner may be subject to penalties: the OCFI may impose fines of up to $10,000 for each violation of any rules and regulations under title 7 chapter 143 of the Laws of Puerto Rico, and the OCFI may also impose fines of up to $5,000 for each day that a Mortgage Servicer fails to comply with any orders issued by the Commissioner.

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