CFPB Examines Mortgage Servicers’ Response to Pandemic

On May 16, 2022, the CFPB published a metrics report examining mortgage servicer’s responses to the COVID-19 pandemic. The data, collected across 16 large servicers from May through December 2021, show that homeowners are facing challenges connected to working with their mortgage servicers. CFPB Director Rohit Chopra marks that the CFPB will be closely monitoring mortgage servicer performance to ensure that they are meeting their obligations under the law.

Key findings from the report include:

• Many borrowers exited COVID-19 hardship forbearance with no loss mitigation solution in place. According to the CFPB, 15% of loans exited forbearance in a delinquent status, with no loss mitigation in place, with some servicers reporting significantly higher figures. 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 heightened risk of foreclosure.

• Some mortgage servicers significantly lag in call center response time. Compared to other servicers, the outliers in the CFPB's reported call metrics data include relatively high average hold times exceeding ten minutes and call abandonment rates exceeding 30%. The call metrics indicate that some borrowers may have difficulty establishing live contact and obtaining assistance over the phone to resolve their mortgage questions or challenges.

• Data on borrowers’ language preferences remained limited. Among the servicers who provided language preference data, the percentage of borrowers in delinquency and who had a non-English language preference increased during the reviewed period. Conversely, the percentage of borrowers in delinquency and who identified English as their preferred language, decreased. Recent action by the FHFA requiring mortgage originators to inquire about language preference at the time of origination could help close the gap in delinquency rates between English and non-English speakers.

• Some mortgage servicers relied on systems that could not provide information on key metrics. Inconsistent data, untracked metrics, and inability to provide requested metrics have concerned the CFPB. The CFPB is concerned about whether these servicers can ensure that all borrowers receive adequate and timely assistance in compliance with federal consumer financial protection law.

The CFPB’s continued monitoring and supervision of the mortgage markets suggests that the agency will continue to broaden its range of enforcement activities. Firstline Compliance specializes in helping you protect you and your company by staying in front of compliance rules and regulations. Contact Firstline at (831) 325-3369 or info@firstlinecompliance.com with questions and comments.