CFPB outlines plan to keep tabs on mortgage servicers

(April 9, 2021) Following its proposed rules to prevent “avoidable foreclosures,” the bureau later in the week released a new bulletin detailing its expectations for mortgage servicers’ engagement with borrowers in the closing months of forbearance programs created in the wake of the financial impact of the coronavirus crisis.

Bulletin 2021-02, “Supervision and Enforcement Priorities Regarding Housing Insecurity,” explains the CFPB’s intention to monitor servicers’ engagement with borrowers “at all stages in the process” in coming months and to prioritize mortgage servicing oversight work in carrying out its enforcement and supervision in the coming year.

The bulletin states that, in its oversight work, the CFPB plans to pay particular attention as to whether servicers are:

  • Providing clear and readily understandable information to borrowers about their options for payment assistance;
  • Complying with the outreach requirements in Regulation X (Real Estate Settlement Procedures Act, or RESPA) to ensure that borrowers are getting needed information about loss mitigation options;
  • Complying with the Equal Credit Opportunity Act’s (ECOA’s) prohibition against discriminating against any applicant, with respect to any aspect of a credit transaction, including in their work with limited English proficiency borrowers and those having a range of income types;
  • Promptly handle loss mitigation inquiries and avoid unreasonably long hold times on phone lines (for example, the CFPB plans to scrutinize servicer conduct where hold times are significantly longer than industry averages);
  • Maintaining policies and procedures that are reasonably designed to achieve the continuity of contact objectives to ensure that delinquent borrowers receive accurate information about their loss mitigation options;
  • Evaluating the applications consistent with the Regulation X requirements to promote timely and consistent evaluations (for borrowers who submit complete loss mitigation applications);
  • Complying with foreclosure restrictions in Regulation X and other federal or state foreclosure restrictions; and
  • Whether servicers are complying with the Fair Credit Reporting Act’s (FCRA) requirements to report the credit obligation or account appropriately.

Bulletin 2021-02: Supervision and Enforcement Priorities Regarding Housing Insecurity