In late June the Consumer Financial Protection Bureau (CFPB) announced amendments to federal mortgage servicing regulations to "help protect mortgage borrowers from unwelcome surprises as they exit forbearance." Those changes don't take effect until August 31 but, with early entrants to the program nearing the end of their 18 month eligibility for forbearance, CFPB has issued what could be considered a report card on servicer performance thus far in the pandemic.

CFPB surveyed 16 large servicers, looking at their call management and handling of delinquency rates. Call management reflects how well servicers are dealing with the volume of homeowner calls.  This includes the Average Speed to Answer (ASA) and Abandonment Rates (AR), a measure of how many borrowers disconnect from servicing calls prior to completion. Most servicers reported abandonment rates of less than 5 percent during the reporting period, while others exceeded 20 percent, and one peaked at 34 percent.

While there were fluctuations, overall, ASA remained relatively stable but there were significant variations among servicers. Two bank servicers were outliers, reporting monthly ASAs that peaked at 26.5 minutes and 19.31 minutes before decreasing substantially in the final months of the reporting period. By comparison, certain other servicers reported monthly ASAs as low as 1, 7, and 12 seconds.

CFPB also looked at the support servicers are providing to homeowners transitioning out of COVID-19 forbearance programs.  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.

 

 

Many servicers saw increased delinquent exit rates in March and April 2021, and some servicers were clear outliers. For federally backed loans, three servicers had relatively higher delinquent exit rates for one or more serviced portfolios - consistently exceeding 50 percent. These servicers, including one bank servicer, used the same sub-servicer for the reported portfolio(s). In addition, a subprime servicer's rate of delinquent exits increased from less than 15 percent to approximately 60 percent in April 2021. For private loans, two servicers - including two of the same servicers with higher rates for federally backed loans - saw delinquent exit rates exceeding 50 percent for private loans as of April 2021. Differences in delinquency rates may, of course, reflect the differing composition and risk profile of each servicer's portfolio.

 

 

Nearly half of servicers in the report clearly stated that they did not collect or maintain information about borrowers' limited English proficiency (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.

The report found the types of assistance programs offered to homeowners and whether homeowner applications to those programs were accepted or rejected was consistent. 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.

There were also delinquent borrowers who did not request COVID-19 hardship forbearance. The numbers ranged from about 323,0000 to 437,000 each month of the reporting period, with a range of about 166,000-231,000 borrowers with federally backed loans and about 114,000-156,000 borrowers with private loans.

 

 

"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."