CFPB Warns of Ongoing Homeowner Risks, Challenges

The Consumer Financial Protection Bureau (CFPB) on Monday (May 16) published a report on mortgage services’ responses to the COVID-19 pandemic, saying homeowners “continue to face significant risks and challenges,” based on data collected from 16 large servicers from May to December 2021.

“While many mortgage servicers are successfully assisting borrowers to avoid foreclosure, today’s report highlights that some servicers are lagging their peers and are less well-equipped to assist borrowers who have exited pandemic housing protections,” CFPB Director Rohit Chopra said in a bureau press release.

“We will be closely monitoring mortgage servicer performance to ensure that they are meeting their obligations under the law,” he said.

About 330,000 homeowners had delinquent loans, their loans were no longer in forbearance and they had no loss mitigation solution in place as of the end of 2021, the report said. Borrowers have struggled to get timely responses from their mortgage servicer’s call centers, according to the CFPB report, with some servicers making borrowers wait more than 10 minutes and abandonment rates exceeding 30%.

Additionally, delinquency rates were higher for private loans — between 25% and 39% — than for federally backed loans, which were between 11% and 17%.

“While servicers have made progress working through delinquent loans, exiting a COVID-19 hardship forbearance with no loss mitigation solution in place puts a borrower at a heightened risk of foreclosure,” the CFPB report said.

“The CFPB’s continued monitoring and supervision of the mortgage market shows borrowers are still struggling with the after-effects of the pandemic, and the CFPB is encouraging mortgage servicers to enhance outreach to borrowers exiting forbearance and closely monitor data on borrower demographics and outcomes,” the bureau continued.

In January, the CFPB said it will look into post-secondary schools like for-profit colleges, which extend private loans to students, and its own exam procedures, including adding a section for institutional student loans.

Read more: CFPB to Probe College Loan Programs

The exam procedures will come with information about practices that CFPB examiners will review, including placing enrollment restrictions, withholding transcripts, improperly accelerating payments, failing to issue refunds and maintaining improper lending relationships.

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