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CFPB Measures Mortgage Servicer Performance

As the mortgage servicing world prepares for an unprecedented era of staggering operational challenges in the wake of the COVID-19 pandemic, the Consumer Financial Protection Bureau has consistently advised companies to put effective practices in place to address borrowers' needs related to tapering forbearance programs and other government loss-mitigation efforts. Now the bureau has issued its first report measuring the industry's performance. Looking at 16 major mortgage servicing firms, the CFPB concludes pandemic responses have "varied significantly" and indicates that now is the time to identify and fix shortcomings.

The CFPB's Acting Director Dave Uejio suggests servicers compare the CFPB'S data to their own internal metrics and demonstrate "concrete efforts toward" improving in needed areas. And he cautions any who do not.

“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,” Uejio said. “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's researchers charted indicators such as call handling and loan delinquency rates, finding, for example, that while many servicers managed to handle high call volume with an average hold time below three minutes, others reported keeping callers waiting for as long as 26 minutes.

The key metrics utilized in the CFPB report include those call metrics including average speed to answer and abandonment rates; pandemic forbearance exit metrics to determine support provided to homeowners transitioning out of such programs; delinquency metrics to identify variation among servicers; COVID-related borrower-assistance program enrollment; and borrowers profile metrics to better understand needs such as language assistance. According to the CFPB, "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. That also prevented the CFPB from evaluating the impact of the CARES Act’s home mortgage loan forbearance provisions on particular racial groups, it reported.

In conclusion, the bureau—which noted that it anticipates follow-up studies on the unnamed companies within the report—urged servicers to "enhance their communication capabilities and outreach efforts to educate and assist all borrowers in resolving delinquency and enrolling in widely available assistance and loss mitigation options."

The authors of the study added, "The CFPB also encourages servicers to ensure that their compliance management systems include robust measures to identify and mitigate fair lending risk."

The full report is available at files.consumerfinance.gov.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at [email protected].

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