CFPB Updated Covid-19 Data Mortgage Services Report

This GT Alert covers the following:

  • CFPB Report on COVID-19 Pandemic Response Measures for Mortgage Servicing for May-December 2021;

  • Reporting metrics: service portfolio, call metrics, COVID-19 hardship forbearance signups, COVID-19 hardship forbearance exits, default, borrower profiles;

  • The CFPB encourages mortgage servicers to improve outreach to borrowers exiting forbearance and closely monitor data on borrower demographics and outcomes.

On May 16, 2022, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a report regarding COVID-19 response measures based on its “observations from data obtained by 16 major mortgage loan servicers” from May to December 2021 (report). This report follows a August 2021 Report regarding the Bureau’s observations based on data obtained from December 2020 to April 2021 (reporting period).

In a press release accompanying the report, CFPB Director Rohit Chopra said, “[w]While many mortgage managers are successfully helping borrowers avoid foreclosure, today’s report highlights that some managers are lagging behind their peers and less equipped to help borrowers who have left protections housing in the event of a pandemic. Director Chopra said: “[w]We will closely monitor the performance of mortgage servicers to ensure that they meet their obligations under the law.

Relevant context

As we already reported in April, Mayand June In 2021, the CFPB strengthened its monitoring and enforcement of mortgage services and finalized its rules for managing mortgages in the event of a pandemic.

The stated goal of the report is “to identify areas of risk in repairers’ response to the COVID-19 pandemic.” The report examines service portfolios, call metrics, forbearance enrollments and exits related to COVID-19 related hardship, defaults and borrower profiles for the period May to December 2021 from a “large representative sample of the mortgage services industry”.

Report Analysis

The report analyzes six key data points and provides insight into the performance of mortgage servicers serving borrowers in need of COVID-19 mortgage repayment assistance.

  • Portfolio management. The management portfolios examined in the report contain both federally guaranteed loans (86%) and private loans (34%).

  • Call metrics. The report analyzes the number of consumer inquiries made to repair call centres. During the relevant period, the services reported, in total, a monthly call volume of between 3.32 and 3.64 million requests.

    In addition to call volume, the report focuses on three additional key metrics: average speed of answer, abandon rates, and average handle time. In analyzing the data, the Bureau notes that most service agents reported stable call metrics throughout the reporting period. However, the Bureau found that several service agents reported spikes in average response speed and abandon rates. These services had average wait times greater than 10 minutes and drop-out rates greater than 30%. These metrics indicate that borrowers may have difficulty getting phone support from some providers, especially if these metrics remain high.

  • COVID-19 Hardship Abstention Registrations and outings. COVID-19 hardship enrollments have been declining since peaking in mid-2020. During the reference period, registrations increased from 163,000 to 68,000 for federally guaranteed loans and from 42,000 to 17,000 for private loans.

    Outflows from COVID-19 related difficulties ranged monthly from 60,000 to 90,000 for federally guaranteed loans and from 10,000 to 19,000 for private loans. The report aggregates data regarding the status of the loan at the time of exit, including defaults with no loss mitigation in place, modification, foreclosure, short sale, and deed in lieu of foreclosure. Across all managers, 15.2% of borrowers exited forbearance in the event of default with no loss mitigation in place. As the Bureau notes, exiting default forbearance without a loss mitigation solution puts borrowers at increased risk of foreclosure, negative credit reports and other defaults.
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  • Delinquency. Delinquency is a new metric that the CFPB has not tracked before regarding COVID-19 abstentions. Default rates among federally guaranteed loans have remained constant between 0% and 15%. There was one notable exception – a subprime loan manager of federally guaranteed loans – who reported delinquency rates consistently exceeding 20%. Delinquency rates for private loans were generally consistent, with most managers reporting rates below 15%. However, several private loan servicers have reported rates above 30%. Overall, outstanding forbearance exits rose from 9,000 in May to 21,000 in October, before dropping to 14,000 in December.

  • Borrower profiles. The CFPB asked borrowers for language preferences and demographic information to better understand borrowers with limited English proficiency (LEP) and racial minorities. The report notes that the completeness and quality of this data varies considerably from one repairer to another. With respect to race, the data gaps were so large among repairers that the Bureau was unable to make comparisons.

    Despite limited data on LEP borrowers, the information shows a growing trend of borrowers who were delinquent after forbearance with no loss mitigation in place. The report notes that this may indicate greater difficulties in obtaining information in the language to access available loss mitigation options. The CFPB warns that failure to serve LEP borrowers and provide access to information and access to financial products and services for which they are eligible could result in violations of the Equal Credit Opportunity Act ( ECOA). The Office “encourages managers to ensure that LEP borrowers who require loss mitigation after leaving forbearance are served in a manner commensurate with the services provided to all other borrowers” and to “improve their data collection and retention of borrower language preferences” to improve communications and access to information and ownership retention opportunities. The Bureau’s current position that repairers must use robust LEP services runs counter to existing CFPB LEP guidance, issued during the previous administration, which suggested that adequate disclosure to consumers of gaps in coverage LEP during the product life cycle would be an important compliance risk mitigation factor.
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Conclusion

In summary, the report shows potential areas of concern regarding the availability of telephone support for all borrowers and information and access in the language for LEP borrowers. This signals that the CFPB monitors borrowers’ access to assistance both generally and specifically with respect to language resources. The report further demonstrates the CFPB’s emphasis on ECOA compliance, particularly when read in conjunction with May 9, 2022 Advisory opinion and the Bureau’s previous statements, guidance and rules regarding pandemic mortgage service standards from April 2021.

The CFPB closes its press release on the Report by informing repairers, “[t]The CFPB’s ongoing monitoring and oversight of the mortgage market shows that borrowers are still grappling with the aftermath of the pandemic, and the CFPB encourages mortgage servicers to improve outreach to borrowers coming out of forbearance and to closely monitor data on borrower demographics and outcomes.

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 139

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