The Consumer Financial Protection Bureau (CFPB) recently published a report detailing 16 large mortgage servicers’ COVID-19 pandemic response.
The report’s data metrics include call handling and loan delinquency rates, and they highlight the industry’s widely varied response to the pandemic. For example, many servicers managed to handle high call volume with an average hold time below 3 minutes, while others reported keeping callers waiting for as long as 26 minutes. The CFPB expects servicers to compare the report’s findings to their own internal metrics to identify opportunities for, and demonstrate concrete efforts toward, improvement.
“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,” said CFPB Acting Director Dave Uejio. “Today’s 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 CFPB used supervisory data from 16 large servicers to understand how they are interacting with homeowners during the pandemic and whether those interactions are effective. The CFPB is monitoring key data metrics, including:
- Call metrics to understand how servicers managed the volume of homeowner calls. Most servicers reported abandonment rates of less than 5% during the reporting period, while others exceeded 20%, and one peaked at 34%.
- Pandemic forbearance exit metrics to determine the support provided to homeowners transitioning out of COVID-19 hardship forbearance programs. Many servicers saw increased delinquent exit rates in March and April 2021, and some servicers were clear outliers. For federally backed loans, 3 servicers, which used the same sub-servicer, had relatively higher delinquent exit rates for one or more serviced portfolios – consistently exceeding 50%.
- Delinquency metrics to identify, among other things, variation of homeowner delinquency rates among servicers. Overall delinquency rates ranged from about 1% to 26% for both federally backed and private loans.
- Borrower profile metrics to determine whether and how servicers track borrowers’ race and limited English proficiency (LEP) status. Nearly half of servicers in the report clearly stated that they did not collect or maintain information about borrowers’ LEP status, which may lead to borrowers not receiving needed language assistance. Some of the servicers also reported not maintaining data on borrowers’ race, which may raise the risk of fair lending violations.
- Pandemic assistance enrollment metrics to understand the types of assistance programs offered to homeowners and whether homeowner applications to those programs were accepted or rejected. Forbearance was widely available for borrowers with both federally backed and private loans, and the reported denial rates were consistently low for both loan types.
- The CFPB also requested metrics on COVID-19 hardship forbearance requests that were denied. The reported number of denials for federally backed loans was consistently low, with the aggregate number of denials ranging from 0 to about 500 per month. Only one servicer reported more than 200 denials in any month of the reporting period.
- Denial counts for private loan forbearance programs were similarly low.
- One subprime servicer reported a relatively high number and rate of denied requests for COVID-19 hardship forbearance for private loans, peaking at nearly 500 denials in December 2020 and ranging between 12-18% of forbearance requests during the reporting period. This may indicate a relatively higher risk that the servicer’s private loan borrowers –averaging about 45% of its servicing portfolio –are unable to obtain pandemic-related hardship assistance because of specific private loan owner program requirements or other issues.
- The aggregate reported number of COVID-19 hardship forbearance exits from all servicers increased from approximately 55,000 to 106,000 per month for federally backed loans and 8,000 to 12,000 for private loans.
- The aggregate reported number of delinquent COVID-19 hardship forbearance exits during the reporting period consistently increased from about 3,000 to nearly 14,000 for federally backed loans and from about 1,000 to 3,000 for private loans.
- Overall, the number of delinquent exits increased more than fourfold during the reporting period.
- Across the industry, as of June 2021, about 179,000 of mortgage borrowers were 90+ days delinquent and had not participated in a forbearance plan.
- About 569,000 borrowers with early stage delinquencies had not participated in a forbearance plan.
- For federally backed loans, a bank servicer with loans serviced by a sub-servicer saw the highest rate of delinquent borrowers who did not request forbearance during the reporting period – between 38% and 44%.