Newsroom

The CFPB published a compliance bulletin warning mortgage servicers of an expected wave of foreclosures this fall once coronavirus relief provisions expire. The bureau urged servicers to "take all necessary steps now" and prepare to help borrowers.

The bureau indicated it will monitor how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation.

"Our first priority is ensuring struggling families get the assistance they need," said CFPB Acting Director Dave Uejio. "Servicers who put struggling families first have nothing to fear from our oversight, but we will hold accountable those who cause harm to homeowners and families."

The bureau provided six areas it will focus on to determine how well servicers are:

• being proactive, and instructed borrowers to contact borrowers in forbearance before the end of the forbearance period so they have time to apply for help;
• working with borrowers by providing all necessary information and helping borrowers to obtain documents and other information needed to evaluate the borrowers for assistance;
• addressing language access and managing communications with borrowers with limited English proficiency and maintaining compliance with the Equal Credit Opportunity Act (ECOA) and other laws;
• evaluating income fairly, noting that, where servicers use income in determining eligibility for loss mitigation options, servicers should evaluate borrowers’ income from public assistance, child-support, alimony or other sources in accordance with the ECOA's anti-discrimination protections;
• handling inquiries promptly, indicating that the bureau will closely examine servicer conduct where hold times are longer than industry averages; and
• preventing avoidable foreclosures, with the bureau expecting servicers to comply with foreclosure restrictions in Regulation X and other federal and state restrictions in order to ensure that all homeowners have an opportunity to save their homes before foreclosure is initiated.

Federal financial regulators, including the NCUA and CFPB, in April 2020 issued a joint policy statement to provide regulatory flexibility to mortgage lenders and enable them to work with customers who may be struggling due to the coronavirus emergency. This policy statement was not among those the bureau rescinded or withdrew from this week; the bureau said it will continue to evaluate servicer activity consistent with this joint policy statement.

The bureau and Federal Trade Commission (FTC) earlier this week announced they are investigating potentially illegal eviction practices. The efforts follow a CFPB report on housing insecurity, which found nearly 10 percent of U.S. households could face eviction and foreclosure when COVID-related relief provisions expire in the coming months.

NAFCU has consistently flagged its concerns related to increased forbearance requests amid the coronavirus pandemic and how credit unions are working with members impacted by the crisis with regulators and lawmakers.