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 terms have reached their highest monthly average since March and April of 2020, the CFPB said, adding that the number of borrowers reporting struggles with making mortgage payments is trending upward.
One of the complaints the CFPB highlighted involved servicer communications.
“Many consumers complained that servicers did not provide clear and accurate information about their options,” the CFPB said. “In particular, consumers reported that servicers were not providing information about loss mitigation until after the consumer’s forbearance had ended, and that the information provided about post-forbearance options was confusing and incomplete. The CFPB encourages servicers to use all available tools to reach struggling homeowners and to do so in advance of the end of the forbearance period.”
Other complaints involved reports of long delays in having loans modified so that borrowers could resume mortgage payments, the CFPB said. Some cases involved servicers demanding additional documents, and others claimed that servicers provided conflicting information about what options were 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 delinquent or in a forbearance program compared to white borrowers.
“More borrowers are behind on their mortgage than at any time since the height of the Great Recession,” CFPB Acting Director Dave Uejio said in a statement. “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 in our power to help families stay in their homes. As we warned mortgage servicers last month, unprepared is unacceptable.”
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 servicers to enhance communications with borrowers who are delinquent or in forbearance, allow servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships, and require servicers to afford all borrowers a special pre-foreclosure 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.
Borrowers in forbearance or delinquent are disproportionately Black and Hispanic, the CFPB said, pointing out that 33 percent of borrowers in forbearance and 27 percent of delinquent borrowers are Black or Hispanic even though only 18 of the total population of mortgage borrowers are Black or Hispanic.
The CFPB also found disproportionate effects for mortgages with high loan-to-value ratios. Borrowers in forbearance or delinquent are disproportionately likely to have high LTV and limited equity, the CFPB said, leaving them vulnerable to being underwater.
Half of all loans in forbearance have an LTV greater than 60 percent compared to only 34 percent of current loans. Borrowers who are behind on their payments but not in forbearance are more than five times as likely to have an LTV greater than 95 percent compared to borrowers who are current on their payments, the CFPB said.