The Consumer Financial Protection Bureau recently released to Congress the 2020 Consumer Response report. While overall complaints were up 54% year-over-year, complaints against mortgage companies were up just 7.5%, and complaints against mortgage servicers were actually down, by 3.5%.
These results are notable considering the sheer speed and impact the pandemic had on the mortgage finance industry.
In a flash, millions of Americans lost their jobs and incomes. Congress responded by passing the CARES Act, which included mandates for forbearance, moratoriums on eviction and foreclosure, and prohibitions against adverse credit reporting. All of it was effective immediately, and mortgage servicers were asked to execute these directives with little guidance on how to ensure compliance with the new law.
The servicing industry had to do this even while shifting its own workforce out of the office and into their homes. In less than 10 weeks, mortgage servicers successfully helped 4.3 million Americans enter forbearance plans. According to Black Knight, servicers have advanced almost $19 billion in unpaid principal and interest to investors in the past year.
As mortgage servicers implemented congressional and agency mandates, the industry simultaneously addressed consumers’ questions and concerns with immediate, tangible solutions. We worked with the GSEs to develop better call scripts to ensure at-risk borrowers understood their options. We supported efforts to expand the payment deferral option for borrowers, providing a streamlined exit process with no documentation. We also fought to ensure loans in forbearance remained eligible for sale, providing certainty and removing marketplace risk. And most recently, MBA helped stand up an industry outreach campaign to connect with borrowers who have not contacted their servicers about their end-of-forbearance alternatives.
Lessons from the financial crisis and recent natural disasters also proved valuable. The Flexible Modification, for example, was streamlined so that homeowners can keep their house and begin a different payment plan. And we engaged the GSEs and FHA to change underwriting so borrowers exiting a COVID-19 forbearance would be eligible for new financing soon after exit, removing a GSE credit policy barrier that would have prevented them from refinancing for a year.
Finally, I want to draw attention to the loan originators who, in the face of economic uncertainty and a near-national lockdown, still found ways to underwrite and fund home purchases and help borrowers refinance their mortgages. Working with our members, we identified potential barriers to closing loans in a pandemic, and then worked with CFPB, the federal housing agencies and the GSEs to remove those barriers and close loans during the lockdowns. Not only did this help borrowers, but it provided the nation’s economy with a much-needed boost in credit, commerce, and production.
We have a long and uneven road ahead of us, but the past has been insightful; no one wins when a loan fails. The ability for the industry and mortgage servicers to overcome the obstacles created by COVID-19 will depend on our ability to work together, listen and learn, and keep the best interests of the nation’s borrowers and lenders front and center.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Robert Broeksmit at bob@mba.org
To contact the editor responsible for this story:
Sarah Wheeler at swheeler@housingwire.com
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