Declaring “no time to waste, and no excuse for inaction,” the acting director of the Consumer Financial Protection Bureau (CFPB) on Thursday issued Bulletin 2021-01 containing compliance and policy guidance for mortgage servicers in their work with homeowners struggling amid the COVID-19 pandemic as pandemic-related assistance programs near their end.
“Servicers who put struggling families first have nothing to fear from our oversight, but we will hold accountable those who cause harm to homeowners and families,” bureau Acting Director Dave Uejio said in a statement with Thursday’s release on the new bulletin.
The bureau release noted that millions of homeowners currently in forbearance will need help from their servicers when the pandemic-related federal emergency mortgage protections expire this summer and fall.
It said that as of January 2021, some 2.7 million borrowers remained in forbearance or other assistance programs initiated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Of those borrowers, 2.1 million were in forbearance and at least 90 days delinquent on their mortgage payments. Additionally, 242,000 mortgages not in forbearance programs were at least 90 days delinquent, it said.
“Industry data suggest that nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many of them a year or more behind on their mortgage payments,” the CFPB stated. “Beginning with the expiration of the federal foreclosure moratoriums at the end of June 2021, mortgage servicers will need ramped-up capacity to reach out and respond to the large number of homeowners likely to need loss mitigation assistance. To meet this surge, servicers will need to plan now.”
The CFPB, in its oversight of mortgage servicers, said it is focused on preventing avoidable foreclosures. It said it will pay particular attention to how well servicers are:
- Being proactive. Servicers should contact borrowers in forbearance before the end of the forbearance period so they have time to apply for help.
- Working with borrowers. Servicers should work to ensure borrowers have all necessary information and should help borrowers in obtaining documents and other information needed to evaluate the borrowers for assistance.
- Addressing language access. The CFPB will look carefully at how servicers manage communications with borrowers with limited English proficiency and maintain compliance with the Equal Credit Opportunity Act (ECOA) and other laws.
- Evaluating income fairly. Where servicers use income in determining eligibility for loss mitigation options, servicers should evaluate borrowers’ income from public assistance, child-support, alimony or other sources in accordance with the ECOA’s anti-discrimination protections.
- Handling inquiries promptly. The CFPB will closely examine servicer conduct where hold times are longer than industry averages.
- Preventing avoidable foreclosures. The CFPB will expect servicers to comply with foreclosure restrictions in Regulation X and other federal and state restrictions in order to ensure that all homeowners have an opportunity to save their homes before foreclosure is initiated.
The bureau said that, provided that servicers are demonstrating effectiveness in helping consumers as directed in the compliance bulletin, it will continue to evaluate servicer activity consistent with the Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the COVID-19 Emergency and the CARES Act (April 3, 2020), which provides flexibility on certain timing requirements in the regulations.