The CFPB sees its mortgage complaints increase
Consumers submitted more mortgage complaints to the Consumer Financial Protection Bureau in March than in any month since April 2018, the CFPB said in a statement yesterday.
Mortgage complaints that mentioned forbearance or related conditions reached their highest monthly average since March and April 2020, the CFPB said, adding that the number of borrowers reporting difficulty making mortgage payments was trending on the rise.
One of the complaints raised by the CFPB concerned communications with duty officers.
“Many consumers have complained that service providers do not provide clear and precise information about their options,” CFPB said. “In particular, consumers reported that service providers did not provide information on loss mitigation until the end of the consumer’s forbearance and that the information provided on post-forbearance options was confusing and incomplete. The CFPB encourages repairers to use all the tools available to reach owners in difficulty and to do so before the end of the forbearance period. “
Other complaints involved reports of long delays in modifying loans so borrowers could resume mortgage payments, the CFPB said. Some cases involved managers demanding additional documentation, and others claimed managers provided conflicting information about the options available and whether the consumer was eligible for a loan modification.
In a separate report, the CFPB also found that black and Hispanic mortgage borrowers were more likely to be in default or in a forbearance program than white borrowers.
“More borrowers are behind on their mortgages than at any time since the height of the Great Recession,” CFPB interim director Dave Uejio said in a statement. “Communities of color have been hit hard by the pandemic, and the latest data shows that many borrowers are still suffering. CFPB will continue to actively research and respond to market developments, doing everything in its power to help families stay at home. As we warned last month, mortgage managers are unprepared. “
The CFPB last month proposed new rules to help prevent foreclosures for borrowers affected by the COVID-19 emergency. If finalized, the rules would temporarily require administrators to improve communications with delinquent or forborne borrowers, allow administrators to offer certain streamlined loan modification options to borrowers facing COVID-19 hardship, and require administrators to offer all borrowers a pre-closing review period. The CFPB will accept comments on the proposal until May 10.
In a research brief, “Characteristics of Mortgage Borrowers During the COVID-19 Pandemic,” the CFPB found that some homeowners and communities are more at risk than others.
Forbearance or delinquent borrowers are disproportionately black and Hispanic, CFPB said, noting that 33% of forbearers and 27% of delinquent borrowers are black or Hispanic even though only 18 of the total mortgage borrower population are black or Hispanic.
The CFPB also found disproportionate effects for high loan-to-value mortgages. Borrowers who abstain or are in default are disproportionately at risk of having high LTVs and limited equity, the CFPB said, making them vulnerable to flooding.
Half of all forbearance loans have an LTV greater than 60 percent, compared to only 34 percent of current loans. Borrowers who are late on their payments but do not abstain are more than five times more likely to have an LTV above 95% compared to borrowers who are up to date on their payments, CFPB said .