CFPB Warns Mortgage Servicers To Be Prepared For A Surge In Homeowners Needing Assistance

CFPB Warns Mortgage Servicers To Be Prepared For A Surge In Homeowners Needing Assistance

April 2, 2021

The Consumer Financial Protection Bureau is taking a zero-tolerance approach for mortgage servicers who are unprepared for the upcoming wave of homeowners in danger of foreclosure. Millions of homeowners are currently in forbearance protections but as those pandemic-related federal emergency protections expire in the summer and fall, homeowners will need help to navigate the rocky waters in order to steer away from foreclosure.

The CFPB states that servicers should dedicate sufficient resources and staff now, in order to prepare for the upcoming surge in borrowers who need help. The bureau intends to closely monitor how servicers engage with borrowers, respond to borrower requests and process applications for loss mitigation, according to a press release.

"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."

According to the CFPB, as of January 2021, approximately 2.7 million borrowers remained in forbearance programs either through the CARES Act or through similar assistance from private lenders. The CFPB added that 2.1 million borrowers are in forbearance and at least 90 days delinquent on their mortgage payments. Additionally, the report stated that another 242,000 mortgages not in forbearance programs were at least 90 days delinquent.

"Industry data suggest that nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many of them a year or more behind on their mortgage payments," according to the press release.

"Beginning with the expiration of the federal foreclosure moratoriums at the end of June 2021, mortgage servicers will need ramped-up capacity to reach out and respond to the large number of homeowners likely to need loss mitigation assistance. To meet this surge, servicers will need to plan now."

The CFPB has also provided guidance for servicers as to how to approach the upcoming wave of borrowers in need of assistance.

Click here to read more about how the CFPB plans to monitor mortgage servicer response as forbearance plans expire later on in 2021. 


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