On 4/1/2021, the CFPB warned mortgage servicers to take all necessary steps now to prevent a wave of avoidable foreclosures this fall. In their release, the CFPB explained that millions of homeowners currently in forbearance will need help from their servicers when the pandemic-related federal emergency mortgage protections expire this summer and fall, and that servicers should dedicate sufficient resources and staff now to ensure they are prepared for a surge in borrowers needing help. The CFPB explained that they will closely monitor how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation. The CFPB will also consider a servicer’s overall effectiveness in helping consumers when using its discretion to address compliance issues that arise.
Specifically, the CFPB stated that they will pay particular attention to how well servicers are:
Being proactive. Servicers should contact borrowers in forbearance before the end of the forbearance period so they have time to apply for help.
Working with borrowers. Servicers should work to ensure borrowers have all necessary information and should help borrowers in obtaining 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 servicers use income in determining eligibility for loss mitigation options, servicers should evaluate borrowers’ 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 in order to ensure that all homeowners have an opportunity to save their homes before foreclosure is initiated.
The full CFPB warning can be found here.
