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CFPB warns servicers it’s watching closely, again

CFPB urges mortgage servicers to use the Homeowners Assistance Fund (HAF), to help borrowers avoid foreclosure

The Consumer Financial Protection Bureau today said that they are closely monitoring how servicers conduct themselves to help borrowers avoid foreclosures.

Lorelei Salas, assistant director for supervision policy at the CFPB, wrote in a blog post that the CFPB will be closely monitoring complaints of servicers not giving borrowers the option or time to apply for the Homeowners Assistance Fund (HAF).

The CFPB did not immediately comment.

In the blog post published on Monday, the bureau listed out expectations of servicers, one of which is strongly encouraging servicers to participate in HAF programs. Participating in HAF programs is voluntary, the bureau added.

Per the blog, the watchdog said that servicers should provide borrowers with sufficient time to move through the HAF application process prior to proceeding with foreclosures and that foreclosing on a homeowner while a HAF application is pending will “merit increased scrutiny.”

As of March 1, 2022, 768,000 mortgage borrowers remain in active forbearance, the CFPB wrote. Many of these consumers are seriously delinquent and at risk of foreclosure, the CFPB said.  

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The bureau said that funds from HAF — a federal program that provides money to states, tribes and territories to assist homeowners — can be used as a tool to help these homeowners avoid foreclosures.

For example, the funds can be used to pay down the amount consumers owe on their mortgage, allowing for consumers to enter loan modification with lower payments, the CFPB said.

The bureau also said it expects servicers to train and equip service representatives to help borrowers access the HAF program.

The bureau wrote that servicers must provide borrowers accurate information about the loss mitigation process, including accurate information about the servicer’s participation in the HAF program. The CFPB did not list what the penalties could be for not providing accurate information about the loss mitigation process.

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

In January 2021, the bureau put the industry on alert, warning that it would direct its attention to how mortgage servicers were helping borrowers with COVID-19 forbearance.  At the time, the bureau promised aggressive action. Soon after, it told servicers that “unprepared was unacceptable,” as the end of forbearance approached.

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