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CFPB / RegulatoryMortgage

CFPB report highlights outliers doing a poor job servicing

Connecting with borrowers who have limited English proficiency is a particular pain point

The Consumer Financial Protection Bureau (CFPB) published a report this week looking at how servicers fared in the second half of 2021. The report said that on average, servicers improved their call metrics, but that some servicers continue to lag behind in assisting borrowers.

According to the report, which examined data provided from 16 undisclosed servicers, call metrics, including the average time it took for servicers to answer and abandonment rates, varied greatly from servicer to servicer.

From May 2021 to December 2021, servicers reported that the average speed to answer a borrower’s call after it entered the servicers’ interactive voice response system was 2.95 minutes.

However, some servicers struggled to answer calls in anywhere near that time. One undisclosed servicer saw their time to answer spike to 18.3 minutes in September 2021, while another servicer saw their average time to answer spike to 25 minutes in December 2021.

The average abandonment rate during this seven-month period was well below 10%, the report said. Though, again, there were outliers. The government watchdog said that servicers that reported spikes in answering times saw corresponding spikes in abandonment rates.

Per the report, the same servicer that saw a large spike in answering calls in September 2021 saw abandonment rates exceeding 22% that month. Meanwhile, four undisclosed servicers in December 2021 reported large abandonment rate spikes ranging from 16% to 40%.


Mortgage servicers: If you’re not obsessed with customer service, you’re falling behind

In a world where disparate physical spaces are steadily merging in the central hubs of mobile devices, consumers consider their mortgages one more digital service in need of perfecting. To take full advantage of the current market conditions, lenders and servicers must obsess over customer service. 

Presented by: TMS

Rohit Chopra, director of the CFPB, said that he is seeing improvement among servicers, but that there is room for growth.

“Servicers have done a much better job than they did 15 years ago,” said Chopra, speaking at the Mortgage Bankers Association‘s annual secondary markets conference in New York. “[In the report] we do find that there are some servicers that are really lagging behind their peers and we need to make sure that they are being responsive to homeowners.”

The report found that close to 330,000 homeowners with delinquent loans exited forbearance at the end of last year with no loss mitigation solution in place. Of that sum, 274,000 were federally backed loans.

The government watchdog said that the data shows “progress” but that borrowers exiting forbearance without a loss mitigation in place face a heightened risk of foreclosure. The report stressed that servicers should prioritize borrower outreach.

Overall, from May 2021 to December 2021, servicers reported that the rate of loans exiting forbearance with a status of foreclosure has been relatively low. A mere 11,386 loans had a status of foreclosure during the seven-month period, while 322 loans had an exit status of a short sale.

Of the 8 million borrowers that opted for forbearance, close to 90% have exited, the report stated. And as of March 2022, only 743,000 borrowers remained in active forbearance plans.

The CFPB noted another pain point: servicers struggled to provide information about limited English proficiency borrowers. Servicers could not provide data about the total number of LEP borrowers in their servicing portfolio, the number of LEP borrowers who were delinquent, nor their exit status after forbearance.

From the limited data provided, there seems to be a trend of delinquent LEP borrowers exiting forbearance without a loss mitigation option in place, the CFPB said. This could point to challenges in obtaining in-language information about how to access loss mitigation options, the report noted.

The bureau urged servicers to collect data about a borrower’s language preference to provide improved service to LEP consumers.

The watchdog reiterated in the report that it is prioritizing oversight of mortgage servicers “with special attention to servicers’ management of forbearance exits and the loss mitigation process.”

It’s at least the sixth time the CFPB has issued a similar warning to servicers as they navigate the end of forbearance and loss mitigation. However, it’s not clear if any enforcement actions have resulted from the promise of increased scrutiny.

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