Some mortgage servicers more helpful than others during pandemic, data shows; CFPB plans follow-up with ‘outliers’

Information received from 16 large mortgage servicers this spring to identify areas of risk in servicers’ COVID-19 pandemic response suggests some delinquent borrowers aren’t getting the help they are due, the federal consumer financial protection agency said in a report Tuesday.

The Consumer Financial Protection Bureau (CFPB), in its report conclusion, said the data indicate that some populations of borrowers may have difficulty establishing live contact and obtaining assistance from some servicers. It admonished servicers to check their own performance to ensure they are helping homeowners.

“Many emergency mortgage protections are winding down, and servicers have had ample time to prepare for the millions of distressed homeowners who need their assistance,” CFPB Acting Director Dave Uejio said in a statement with Tuesday’s announcement. “Today’s report should inform servicers’ own data reviews as they determine whether they are doing enough for borrowers. Servicers who find themselves at the bottom of the pack should immediately take corrective steps. The CFPB will hold accountable those servicers who cause harm to homeowners and families.”

The bureau said the report’s data metrics included call handling and loan delinquency rates and highlight the industry’s “widely varied” response to the pandemic. For example, it said many servicers handled high call volume with an average hold time below 3 minutes, while others reported hold times as long as 26 minutes.

In a summary, the bureau noted the key data metrics monitored, and some of the findings, as follows:

  • Call metrics to understand how servicers managed the volume of homeowner calls. The metrics in the report include Average Speed to Answer (ASA) and Abandonment Rates (AR), a measure of how many borrowers disconnect from servicing calls prior to completion. Most servicers reported abandonment rates of less than 5% during the reporting period, while others exceeded 20%, and one peaked at 34%.
  • Pandemic forbearance exit metrics to determine the support provided to homeowners transitioning out of COVID-19 hardship forbearance programs. Many servicers saw increased delinquent exit rates in March and April 2021, and some servicers were clear outliers. For federally backed loans, 3 servicers, which used the same sub-servicer, had relatively higher delinquent exit rates for one or more serviced portfolios – consistently exceeding 50%.
  • Delinquency metrics to identify, among other things, variation of homeowner delinquency rates among servicers. Overall delinquency rates ranged from about 1% to 26% for both federally backed and private loans. (Differences in delinquency rates may reflect the differing composition and risk profile of each servicer’s portfolio.)
  • Borrower profile metrics to determine whether and how servicers track borrowers’ race and limited English proficiency (LEP) status. Nearly half of servicers in the report clearly stated that they did not collect or maintain information about borrowers’ LEP status, which may lead to borrowers not receiving needed language assistance. Some of the servicers also reported not maintaining data on borrowers’ race, which may raise the risk of fair lending violations.
  • Pandemic assistance enrollment metrics to understand the types of assistance programs offered to homeowners and whether homeowner applications to those programs were accepted or rejected. Forbearance was widely available for borrowers with both federally backed and private loans, and the reported denial rates were consistently low for both loan types.

The CFPB said it anticipates conducting follow-up work to gather more information from the servicers and to address outliers in certain metrics.

“Additionally, the CFPB will continue its mortgage servicing oversight work through examinations and enforcement, and it will hold servicers accountable for complying with existing Regulation X requirements, as well as the amended requirements once they take effect,” it said.

CFPB Report: Mortgage Servicers’ Pandemic Response Varies Significantly

Full report