The CFPB recently released a compliance bulletin on “Regulatory and Enforcement Priorities for Housing Uncertainty,” stating that the CFPB will be vigilant about how mortgage servants respond to borrowers seeking help with mitigation .
Bulletin 2021-02 is designed to warn mortgage servants that they should be prepared for “a wave of avoidable foreclosures this fall” when the federal COVID-19-related mortgage protection expires. The bulletin stated that the CFPB expects an “extraordinarily high volume of loans in need of mitigation assistance relatively concurrently,” and that the agency fears that borrowers may not receive effective communications from service providers and that borrowers’ applications will respond to Damage mitigation is not endangered appropriately. With this bulletin, the CFPB announced its intention to give mortgage service priority in enforcement and monitoring over the coming year.
In the bulletin, the CFPB urged the services “to provide sufficient resources and personnel to ensure they can communicate clearly with borrowers, effectively manage borrowers’ requests for assistance, and thereby reduce foreclosures.” In particular, the CFPB highlighted eight areas where they would pay particular attention, including:
- Whether servicers provide borrowers with clear and easy to understand information about payment support options;
- Whether the servicers will comply with Rule X public relations efforts, including whether the servicers will contact borrowers in forbearance before the grace period expires;
- Whether the service providers are complying with the ECOA and Regulation B prohibition of discrimination against an applicant in relation to a credit transaction, including whether the service providers manage communications with borrowers with limited English proficiency and whether the service providers are properly collecting income from public support and maintenance for children evaluate, alimony or other sources if the servicer is required to use the income to determine eligibility for loss mitigation;
- Whether servicers process inquiries about damage reduction immediately or whether the telephone lines have inappropriately long waiting times. The CFPB plans to investigate servicers whose hold times are significantly longer than the industry average.
- Whether the servicer’s policies and procedures are adequately designed to achieve continuity of contact objectives and ensure that criminal borrowers receive accurate information about their mitigation options;
- Whether servicers evaluate mitigation requests in accordance with the requirements of Regulation X to encourage timely and consistent evaluations;
- Whether servicers comply with foreclosure restrictions (in Ordinance X and other federal and state enforcement restrictions); and
- Whether servicers adequately report credit obligations and accounts under the FCRA.
Announcing the bulletin, CFPB Acting Director Dave Uejio stated, “There is a tidal wave of distressed homeowners who will need help from their mortgage service providers in the coming months. Responsible servicers should prepare now. There is no time to waste and no excuse for inaction. Nobody should be surprised what is coming. “
In addition to the publication of the bulletin and the separate announcement by the CFPB about the proposed rule-making (see link below), the CFPB also published a blog post about communication strategies for mortgage service providers during COVID-19. The post discussed the need for servicers to understand their consumers’ contact preferences, which is key to homeowner engagement, and use all of the tools available to reach borrowers, including non-traditional postal techniques such as:
- Using multimedia channels to meet customer requests such as text or personalized emails;
- Development and use of web-based self-service tools and customer portals that allow borrowers to identify options for loan support;
- Providing notices tailored to a borrower’s specific options depending on who owns the loans (e.g., FHA, VA, Fannie Mae, or Freddie Mac); and
- Providing information in multiple languages to assist borrowers with limited English language skills.
The WBK’s report on the rule proposed by the CFPB to amend Regulation X can be found here.