While the number of mortgages in forbearance continues
to fall, Black Knight said there was a 33,000 reduction over the last week and
172,000 homeowners have exited the various programs over the last month, 2.54
million borrowers remain in forbearance. This is 4.8 percent of all those with
a mortgage. Now the Consumer
Financial Protection Bureau (CFPB) is alerting mortgage servicers to prepare
for what may be a wave of avoidable foreclosures as forbearances come to an end
in the fall and the current foreclosure moratoriums expire.
GSEs (Fannie Mae and Freddie Mac) and Ginnie Mae, which is responsible for VA
and FHA loans, have provided several options for borrowers to pay back any past
due mortgage payments that have accrued during the pandemic, many homeowners
will need help from their servicers. CFPB warns them that they need to dedicate
sufficient resources and staff starting now to ensure they are prepared for any
“There is a tidal wave of distressed
homeowners who will need help from their mortgage servicers in the coming
months. Responsible servicers should be preparing now. There is no time to
waste, and no excuse for inaction. No one should be surprised by what is
coming,” said CFPB Acting Director Dave Uejio. “Our first priority is ensuring
struggling families get the assistance they need. 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.”
CFPB says of
those loans remaining in forbearance programs it estimates 2.1 million are at
least 90 days delinquent on their loans. Another 242 mortgages that are not in
forbearance are also seriously delinquent. With nearly 1.7 million borrowers
expected to leave forbearance in September and subsequent months, many of them
may be a year or more behind on their payments. Servicers will need ramped-up
capacity to reach out and respond to the large number of homeowners likely to
need loss mitigation assistance. The CFPB will closely monitor a servicer’s
overall effectiveness in helping consumers when it addresses any compliance
issues that arise.
CFPB says it will be paying particular
attention to how well servicers are:
- Being proactive.
They should contact borrowers before the end of the forbearance period, so
they have time to apply for help, ensure they have all necessary
information and help them obtain 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 and other laws.
- Evaluating income fairly. Where income is used to determine eligibility for loss
mitigation options, servicers should evaluate income from public
assistance, child-support, alimony, or other sources in accordance with
the Equal Credit Opportunity Act’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 to ensure that all homeowners have an opportunity to save
their homes before foreclosure is initiated.
More information is available in CFPB’s
April 1, 2021 compliance bulletin.