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CFPB Reports High Complaints And Racial Disparity In Loan Delinquencies

May 06, 2021
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Two reports by the Consumer Financial Protection Bureau show that overall mortgage complaints have risen to their highest level in 3 years; additionally, Black and Hispanic borrowers are much more likely to be delinquent or in the forbearance program than white borrowers.

The research brief by CFPB titled “Characteristics of Mortgage Borrowers During The COVID-19 Pandemic,” reveals the disparity in loan forbearance between Black and white homeowners. Only 18% of the population is Black or Hispanic, yet 33% of borrowers in forbearance (and 27% of delinquent borrowers) are Black or Hispanic.

Loans in forbearance or delinquent are disproportionately likely to have a high loan-to-value ratio (LTV) and limited equity, leaving them vulnerable to being underwater. Half of all loans in forbearance have an LTV ratio greater than 60% compared to only 34% of all current loans.

CFPB acting director Dave Uejio said, “More borrowers are behind on their mortgage than any time since the height of the Great Recession. Communities of color have been hit hard by the pandemic, and the latest data show that many borrowers are still hurting. The CFPB will continue to seek and actively respond to developments in the market, doing everything we can to help families stay in their home.”

In March 2021, consumers submitted more mortgage complaints to the CFPB than in any month since April of 2018. Mortgage complaints mentioning forbearance or related terms have reached their highest monthly average since March and April of 2020, and the number of borrowers struggling to make payments is also trending upwards.

The most popular complaints by consumers revolve around communication services and delays or denials of loan modifications. Apparently, many consumers complained that services did not provide clear and accurate information about their options. For example, many reported that servicers were not providing information about loss mitigation until after the consumer’s forbearance had ended. There were also long delays in loan modification, and consumers complained that servicers provided conflicting information about their options and eligibility for loan modification.

Click here to read more from the CFPB's findings.

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