Expired Covid-19 Hardship Forbearance Under CARES Act

On May 16, the CFPB released a report examining metrics on mortgage servicers’ responses to the COVID-19 pandemic.  According to the report, homeowners are still facing significant risks and challenges in working with mortgage servicers, particularly borrowers struggling with mortgage payments after their COVID-19 hardship forbearances and other protections under the CARES Act have expired.

The report is based on data collected from 16 large mortgage servicers for the period from May to December 2020 and covers key data points on mortgage servicer performance in assisting struggling borrowers, such as call center metrics, COVID-19 hardship forbearance exits, delinquency rates, and borrower profiles.  The report concludes, for example:

• Many borrowers exited COVID-19 hardship forbearance with no loss mitigation solution in place

• Some mortgage servicers significantly lag industry peers in call center response times

• Data on borrowers’ language preferences remained limited

• Some mortgage servicers relied on systems that could not provide information on key metrics.

According to CFPB Director Rohit Chopra, the data reveals that although many mortgage servicers have been successful in their efforts to assist borrowers avoid foreclosure, some servicers are lagging behind and less well-equipped to assist borrowers who relied on pandemic housing protections.  Throughout the pandemic, the CFPB has increased its oversight of mortgage servicer activities.  For example, in August 2021, it published an initial review of mortgage servicer performance using a similar data set (we previously blogged about this initial report here).

Putting It Into Practice: The recent report serves as a reminder to mortgage servicers that the CFPB is continuing to closely monitor the industry for compliance with consumer protection laws.  Mortgage servicers should take steps to ensure that their policies, practices, and company resources and systems can meet regulatory requirements.  Although the Bureau recognizes that mortgage servicers themselves have also experienced challenges due to the pandemic, it also expects servicers to take necessary steps to meet the demands of these new challenges.  As the report highlights, mortgage servicers should examine their business practices to ensure, for example:

• Outreach requirements in Regulation X are being met, including providing borrowers needed information about loss mitigation options;

• Compliance with the Equal Credit Opportunity Act’s prohibition against applicant discrimination, including whether they are appropriately managing communications with limited English speakers;

• Appropriate handling of borrower inquiries, including avoiding unreasonably long hold times on phone lines; and

• Policies and procedures are reasonably designed to ensure delinquent borrowers receive accurate information about loss mitigation options.