Some of the largest mortgage servicers in the U.S. had varying responses to borrowers’ inquiries during the pandemic, with some servicers struggling to help homeowners, according to a report from the Consumer Financial Protection Bureau.
With just a few weeks to go before temporary rules take effect to delay most mortgage foreclosures, the CFPB issued a report last week based on supervisory data from 16 large mortgage servicers, finding differences in how they handled call volumes and exits from forbearance programs.
The CFPB said it expected servicers to compare the findings to their own internal metrics to identify opportunities for improvement and take steps to improve performance.
“Many emergency mortgage protections are winding down, and servicers have had ample time to prepare for the millions of distressed homeowners who need their assistance,” CFPB Acting Director Dave Uejio said in a statement last week. “[The] report should inform servicers’ own data reviews as they determine whether they are doing enough for borrowers. Servicers who find themselves at the bottom of the pack should immediately take corrective steps. The CFPB will hold accountable those servicers who cause harm to homeowners and families.”
The data reviewed by the CFPB covered December 2020 through April 2021 and included call metrics, forbearance exits, delinquencies and enrollment in pandemic assistance programs.
Most homeowners who applied for a forbearance program were accepted, with denial rates consistently low for both federally backed and private loans, the CFPB said.
How servicers handled borrowers’ inquiries did vary among the servicers. Some servicers were able to handle high call volumes by answering calls on average in less than 3 minutes, while others had longer wait times, including one servicer with an average speed of answer that peaked at 26 minutes. While most servicers saw fewer than 5 percent of callers hang up while waiting on hold, some servicers had abandonment rates that exceeded 20 percent, including one that peaked at 34 percent.
Most servicers had their highest levels of call volumes in March 2021, a year after the start of the pandemic and the forbearance programs authorized by the CARES Act.
The CFPB said in its report that a correlation between higher call volumes and higher average speed of answer could indicate an opportunity for mortgage servicers to assign additional staff and resources to address higher volumes and reduce average speed of answer.
The study also found that the percentage of borrowers exiting forbearance into delinquency rose from about 10 percent to 30 percent of all forbearance exits during the reporting period for both federally backed and private loans. Forbearance exits into delinquency varied by servicers, with some seeing less than 5 percent and others more than 50 percent.
“Overall, the delinquency metrics indicate areas of risk and opportunities for some servicers to reduce avoidable foreclosures and other potential harm to delinquent borrowers by enhancing outreach efforts, including live contact, to increase the likelihood of borrowers requesting and enrolling in COVID-19 hardship forbearances or other loss mitigation options,” the CFPB said.
The CFPB said in last week’s statement that it would continue with its oversight of mortgage servicers and hold them accountable for complying with existing regulatory requirements, as well as the amended rules that go into effect on Aug. 31.
“The CFPB continues to encourage servicers to enhance their customer communication capabilities and outreach efforts,” the CFPB said. “Servicers should educate and assist borrowers in avoiding delinquency and enrolling in widely available assistance and loss mitigation options.”
