CFPB Reports on Pandemic Challenges for Mortgage Servicers and Borrowers

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The CFPB recently published a report on mortgage servicer data reflecting COVID-19 pandemic related challenges for both borrowers and servicers.  The data in the report were collected from sixteen mortgage servicers—including large banks, non-banks, master servicers, subservicers, and subprime servicers—from December 2020 through April 2021.

With only a few exceptions, the CFPB found that the servicers were doing a good job managing their operations to minimize the risk to borrowers of avoidable foreclosures related to the pandemic.  For instance, although the number of call center inquiries spiked in March 2021—likely as a consequence of the expiration of one-year forbearance terms for many borrowers—most servicers were able to handle incoming calls without significant wait times.  As a result, most servicers had low rates of callers hanging up before they could reach a customer service agent and obtain assistance with their mortgages.  Additionally, among other things, the number of requests for COVID-19 hardship forbearance enrollments was steady over the reporting period; and the number of denials was consistently low, ranging from 0 to about 500 per month for federally-backed loans.

Nonetheless, delinquent COVID-19 hardship forbearance exits, where the borrower exited from a pandemic-related forbearance plan (with no loss mitigation plan in place upon exit) and had a mortgage payment due and at least partially unpaid, increased substantially during the reporting period.  Given the many loss mitigation options currently offered by servicers to assist borrowers experiencing pandemic-related hardship, the CFPB stated that it expected to see a lower number of borrowers in this category.  Further, the CFPB noted that nearly half of the servicers did not collect or maintain information about borrowers’ limited English proficiency (LEP) status and a quarter of the servicers did not compile or maintain data on borrowers’ race.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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