Black and Hispanic mortgage borrowers are much more likely to be delinquent or in a forbearance program than white borrowers, and overall complaints about mortgages have increased to the highest level in three years, the federal consumer financial protection agency said Tuesday.
The Consumer Financial Protection Bureau (CFPB) asserted that two reports it is issuing indicate that “more work needs to be done to help mortgage borrowers” as they cope with the financial impact of the coronavirus crisis.
In the first report on characteristics of mortgage borrowers during the pandemic, the bureau said its research found that borrowers in forbearance or delinquent are disproportionately Black and Hispanic. “For example, 33% of borrowers in forbearance (and 27% of delinquent borrowers) are Black or Hispanic, while only 18% of the total population of mortgage borrowers are Black or Hispanic,” the bureau said in a release.
Loans in forbearance or delinquency (which are “significantly more common” in low-income communities and those of color, as defined by census tracts) are disproportionately likely to have high loan-to-value (LTV) and limited equity, leaving them vulnerable to being underwater, the bureau said.
“For example, half of all loans in forbearance have an LTV greater than 60%, compared to only 34% of current loans. Borrowers who are behind on their payments but not in forbearance are more than five times as likely to have an LTV greater than 95% than borrowers who are current on their payments,” the bureau said.
The second report (a bureau “complaint bulletin”) shows that in March 2021 consumers submitted more mortgage complaints than in any month since April 2018, the bureau said. Mortgage complaints mentioning forbearance or related terms have also reached their highest monthly average since March and April of 2020, the CFPB reported, and the number of borrowers who report they are struggling to make their payments is also trending upward.
The report also lists problems consumers in forbearance are having getting help they need. The agency said those problems included servicers not providing clear and accurate information to consumers about their options; and delays and denials of loan modifications.