CFPB, in new bulletin, outlines plan to monitor mortgage servicer actions as COVID-19 forbearance periods near end

Expectations for mortgage servicers’ engagement with borrowers in the closing months of forbearance programs created amid the COVID-19 pandemic – again, with the aim of reducing avoidable foreclosures – are detailed in a new bulletin from the federal consumer financial protection agency that is set to publish Wednesday in the Federal Register.

The bureau has issued a statement emphasizing its view of servicers’ responsibilities during this period and proposed rules that would bar many foreclosures that might be anticipated when forbearance programs until after this Dec. 31. In both cases, the bureau has said its goal is to help prevent avoidable foreclosures.

The new Bulletin 2021-02, “Supervision and Enforcement Priorities Regarding Housing Insecurity,” explains the bureau’s intention to monitor servicers’ engagement with borrowers “at all stages in the process” in coming months and to prioritize mortgage servicing oversight work in carrying out its enforcement and supervision in the coming year.

That said, Bulletin 2021-02 states that in its oversight work, the CFPB plans to pay particular attention to:

  • Whether servicers are providing clear and readily understandable information to borrowers about their options for payment assistance;
  • Whether servicers are complying with the outreach requirements in Regulation X (Real Estate Settlement Procedures Act, or RESPA) to ensure that borrowers are getting needed information about loss mitigation options;
  • Whether servicers are complying with the Equal Credit Opportunity Act’s (ECOA’s) prohibition against discriminating against any applicant, with respect to any aspect of a credit transaction, including in their work with limited English proficiency borrowers and those having a range of income types;
  • Whether servicers promptly handle loss mitigation inquiries and avoid unreasonably long hold times on phone lines (for example, the CFPB plans to scrutinize servicer conduct where hold times are significantly longer than industry averages);
  • Whether servicers maintain policies and procedures that are reasonably designed to achieve the continuity of contact objectives to ensure that delinquent borrowers receive accurate information about their loss mitigation options;
  • For borrowers who submit complete loss mitigation applications, whether servicers evaluate the applications consistent with the Regulation X requirements to promote timely and consistent evaluations;
  • Whether servicers comply with foreclosure restrictions in Regulation X and other federal or state foreclosure restrictions; and
  • Whether servicers are complying with the Fair Credit Reporting Act’s (FCRA) requirements to report the credit obligation or account appropriately.

Bulletin 2021-02: Supervision and Enforcement Priorities Regarding Housing Insecurity (slated for April 7 Federal Register)

RR: Preventing ‘avoidable foreclosures’ is focus of proposed rules issued by bureau (April 5, 2021)

RR: CFPB, anticipating ‘tidal wave’ of distressed homeowners, says it will brook ‘no excuse’ for servicers’ inaction (April 1, 2021)