WASHINGTON–The Consumer Financial Protection Bureau (CFPB) has published a report examining mortgage servicers’ responses to the COVID-19 pandemic, which it said reveals homeowners continue to face significant risks and challenges connected to working with their mortgage servicers.
“This problem is particularly acute for those borrowers struggling to make their mortgage payments after exiting COVID-19 hardship forbearances,” the CFPB said.
The report is based on data collected across 16 large servicers from May through December 2021.
According to the Bureau, the new mortgage metrics report reveals the challenges borrowers faced as CARES Act protections began to expire, and homeowners transitioned to restarting their monthly payments. The CFPB reported that at the end of 2021, approximately 330,000 homeowners had delinquent loans, their loans were no longer in forbearance, and they had no loss mitigation solution in place.
“One challenge for borrowers was their inability to reach, or get a timely response from, their mortgage servicer’s call center,” the CFPB said. “Mortgage servicer call centers are vital links between the homeowner and servicer that answer homeowners’ questions and provide them with information to make important decisions about their loans. The extent of these challenges varied significantly among servicers.”
Shedding Some ‘Light’
The CFPB said it has prioritized oversight of mortgage servicers throughout the pandemic. In August 2021, it noted it published an initial review of mortgage servicer performance. It said its newest report similarly uses data collected from examinations of 16 servicers that represent a broad cross-section of the mortgage servicing industry.
According to the Bureau, they are different in terms of the types of loans they service (VA, FHA, GSE, PLS, or portfolio), the pre-COVID pandemic delinquency status of the loans they service, and even the geography of where their serviced loans are located,” the Bureau said.
“The differences help to shed light on performance across the mortgage servicing market, and they may also help explain some of the variation identified in the report,” the CFPB added.
The Key Findings
According to the CFPB, the key findings from the report include, along with CFPB analysis:
- Many borrowers exited COVID-19 hardship forbearance with no loss mitigation solution in place. “The 16 servicers reported that over 330,000 borrowers’ loans remained delinquent – with no loss mitigation solution in place – at the end of 2021. Delinquency rates were higher for private loans – between 25% and 39% – than for federally backed loans – between 11% and 17%. While servicers have made progress working through delinquent loans, exiting a COVID-19 hardship forbearance with no loss mitigation solution in place puts a borrower at a heightened risk of foreclosure.”
- Some mortgage servicers significantly lag industry peers in call center response times. “Call metrics showed average hold times of more than ten minutes and call abandonment rates exceeding 30% for some servicers. The call metrics indicate that some borrowers may have difficulty establishing live contact and obtaining assistance over the phone to resolve their mortgage questions or challenges. These metrics varied among servicers, with some servicers performing well and others poorly.”
- Data on borrowers’ language preferences remained limited. “While the CFPB consistently has recommended that servicers collect and maintain information on borrowers’ preferred language, several servicers marked that many of their borrowers’ preferred language was unknown. Among the servicers who provided language preference data, the percentage of borrowers in delinquency and who had a non-English language preference, increased during the reviewed period. Conversely, the percentage of borrowers in delinquency and who identified English as their preferred language, decreased. Recent action by the Federal Housing Finance Agency requiring mortgage originators to inquire about language preference at the time of origination could help close the gap in delinquency rates between English and non-English speakers.”
- Some mortgage servicers relied on systems that could not provide information on key metrics. “Some servicers did not track or were otherwise unable to provide several requested metrics. Additionally, some servicers reported inconsistent data. The report notes that some servicers are not fully able to track and report high-quality data. The CFPB is concerned about whether these servicers are able to ensure that all borrowers, and particularly those borrowers most in need of assistance, receive adequate and timely assistance in compliance with federal consumer financial protection law.”
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