WASHINGTON– The Consumer Financial Protection Bureau has joined with NCUA and several other government agencies in announcing a return to “enforcement of critical protections for families and homeowners.”
Those protections, put in place in the wake of the Great Recession to prevent another foreclosure crisis, “give families the chance to find alternatives to foreclosure before losing their home,” the agencies said.
The joint statement further noted that with the majority of the more than one-million remaining COVID-19 forbearances expected to end before the end of the year, struggling homeowners will need these protections to avoid foreclosure.
“Failures by mortgage servicers and regulators worsened the impact of the economic crisis a decade ago,” said CFPB Director Rohit Chopra. “Regulators have learned their lesson, and we will be scrutinizing servicers to ensure they are doing all they can to help homeowners and follow the law."
No Option to Shop
The statement noted that most homeowners make their monthly mortgage payment to a mortgage servicer.
“Homeowners cannot shop for a new servicer, no matter how badly they are mistreated. As a result, borrowers cannot exercise market power to discipline mortgage servicers and, absent government intervention, have no defense against a servicer’s abuse of market dominances,” the statement said.
In addition to NCUA, the CFPB issued the joint statement with the Federal Reserve System, the FDIC, the Office of the Comptroller of the Currency, and state financial regulators.
“The statement makes clear that the agencies will apply their respective supervisory and enforcement authorities to protect homeowners and address any compliance failures,” the Bureau said.
Steps Taken
The CFPB also released a report summarizing its work to help struggling homeowners and avert another foreclosure crisis. According to the Bureau, the work includes:
- Conducting prioritized assessments, or targeted supervisory reviews, designed to obtain real-time information from mortgage services due to the elevated risk of consumer harm because of the pandemic.
- Reminding servicers that “unprepared is unacceptable,” and that servicers need to dedicate enough resources and staff to ensure they can communicate clearly with homeowners, effectively assist borrowers, and reduce avoidable foreclosures during the surge in forbearance exits this fall.
- Implementing temporary procedural safeguards to help ensure that borrowers have time before foreclosure to explore their options, including loan modifications and selling their homes.
- Analyzing consumer complaint data about mortgage servicing and mortgage forbearances.
- Conducting additional, targeted review of high-risk complaints related to COVID-19 forbearance.
- Analyzing and publishing mortgage servicers’ COVID-19 pandemic response.
- Conducting original research documenting that Black and Hispanic communities, and low-income communities across racial and ethnic groups are at increased risk of another foreclosure crisis due to the disproportionate concentration of mortgage forbearances and delinquencies in those communities;
- Creating an online housing hub website at www.consumerfinance.gov/housing, in partnership with other federal agencies, to connect homeowners, renters and landlords with information about CARES Act assistance and protections.
- Creating and distributing homeowner outreach materials, in English and other languages, that servicers and housing counselors can use to help homeowners affected by the COVID-19 pandemic.
The CFPB said it will continue to monitor closely the performance of mortgage servicers to prevent avoidable foreclosures to the maximum extent possible and will not hesitate to take supervisory or enforcement action if warranted.