The Consumer Financial Protection Bureau said it expects mortgage servicers to continue offering forbearances, deferrals and loan modifications to consumers experiencing financial hardships unrelated to the COVID-19 pandemic.
The CFPB said Wednesday that streamlined loss mitigation options can be made available to any borrower. Though the CFPB’s special foreclosure protections for certain delinquent borrowers expired at the end of 2021, the bureau has invoked the “temporary flexibilities” in its servicing rules to make loss mitigation programs available to consumers experiencing a financial hardship, even if the borrower’s financial troubles having nothing to do with COVID.
“We expect servicers to continue to utilize all the tools at their disposal — including, if available, streamlined deferrals and modifications that meet the conditions of the CFPB’s COVID-19 related mortgage servicing rules — in their efforts to keep consumers in their homes,” Lorelei Salas, the CFPB’s assistant director for supervision policy and acting assistant director for supervision examinations, said in a blog post. “As long as these streamlined loss mitigation options are made available to borrowers experiencing hardship due to the COVID-19 national emergency, those same streamlined options can also be made available under the temporary flexibilities in the rule to borrowers not experiencing COVID-19-related hardships.”
CFPB Director Rohit Chopra vowed last year to crack down on mortgage servicers that do not allow borrowers to restructure loan payments or that keep consumers from enrolling in forbearance or loan forgiveness programs.
Salas said the CFPB’s updated exam procedures provide information on fees that servicers can charge borrowers and misrepresentations related to foreclosure. The 1,812-page supervision and examination manual specifically states that examiners will determine whether a mortgage servicer’s “representatives make misrepresentations or use deceptive means to collect debts.”
The CFPB also has told examiners to seek information on how the servicers communicate with borrowers about homeowner assistance programs. Salas specifically cited the Treasury Department’s Homeowner Assistance Fund, a $9.9 billion-dollar program that was part of the American Rescue Plan Act, that provides relief to help homeowners avoid foreclosure. Salas noted that the program is available “only if mortgage servicers work with state housing finance agencies and housing counselors” to help borrowers complete the application process.
The exam procedures generally describe the types of information that CFPB examiners use to evaluate servicers’ policies and procedures and to assess whether servicers are identifying risks to consumers. The manual includes guidance that the CFPB has released since the last update in mid- 2016.