In the new interim final rule that amends RESPA, one of the requirements of the loss mitigation option is that amounts that the borrower may delay paying do not accrue interest. I'm not sure I understand that. Can we charge the interest they would have paid if the payments had not been deferred, but we can't charge additional interest for all the days that the payments weren't made?

That is to support the loss mitigation programs of the secondary markets. Fannie and Freddie may defer, for example, 3 payments to the end of the loan. Since they utilize 30/360 interest accruals rather than simple interest, they just put the three payments (principal and interest) due at maturity. The loan then continues to process as normal when the payments pick back up without it showing past due.

Thanks. I hope I've got it now.