Moving millions of U.S. homeowners on and off mortgage forbearance plans was never going to be easy—and a recent report from the Consumer Financial Protection Bureau has just confirmed it.
In May, the agency released servicing metrics that showed hundreds of thousands of borrowers were still behind on their loan payments after coming off forbearance plans. More troubling was the fact that many servicers were ill-prepared to help borrowers—and their poor choice of technology was a major contributing factor.
To gauge how well the industry was responding to the COVID-19 pandemic, the CFPB collected data from 16 large mortgage servicers from May 2021 to December 2021, including call center metrics, forbearance exits and delinquency rates for all types of loans.
The CFPB’s report found many homeowners were still struggling to resume making payments after their forbearance protections under the CARES Act began to expire. In fact, by the end of 2021, roughly 330,000 homeowners still had delinquent loans and no loss mitigation solution in place. Even more worrisome was that many weren’t getting timely responses from their servicers, and some could not reach their servicer at all.
Obviously, a mortgage servicer’s call center is a critical resource for borrowers. According to the CFPB’s report, some servicers’ call centers performed fairly well. In fact, for all servicers, the average speed to answer (ASA) a borrower’s call was under three minutes. Yet some servicers left borrowers waiting for more than 10 minutes, while others experienced a 30% or higher call abandonment rate.
As expected, the CFPB announced plans to ramp up industry oversight in the wake of these numbers. Director Rohit Chopra pledged the agency would “be closely monitoring mortgage servicer performance to ensure that they are meeting their obligations under the law.” But will the servicing industry be ready?
One of the more interesting details in the report was that the CFPB found poor handling of borrower requests was often tied to a servicer’s system of record. For example, some mortgage servicers reported inconsistent data while others weren’t able to provide key metrics, simply because their systems didn’t measure them.
Communicating with Limited English Proficiency (LEP) borrowers was another problem. While the CFPB has long recommended that servicers be able to communicate with borrowers in their preferred language, for many of their borrowers, several servicers had no idea what language that was.
This issue had a significant impact on delinquency rates, too. The agency found that while delinquency rates for English-speaking borrowers with no loss mitigation solution in place fell during the entire review period, between November and December 2021, delinquencies rose for LEP borrowers.
These findings shouldn’t be too surprising, as there are huge disparities in the capabilities and performance of different servicing systems. For example, one of the most popular systems doesn’t allow servicers to extract the type of data included in the CFPB’s report. And when it comes to serving borrowers in their preferred language, most servicing systems have very limited options.
It’s well known that all mortgage servicers got a bit of a reprieve from CFPB enforcement activity during the pandemic, simply because they were inundated with requests from troubled borrowers. The assumption at the time was that everyone was doing the best they could.
But those days are over. And without the technology in place to ensure that every borrower receives the assistance they deserve, or to provide the ability to collect and track reporting data, a servicer is much more likely to end up on the CFPB’s radar.
That’s why servicers choose MCC Mortgage Solutions, which provides the industry’s most comprehensive and customizable reporting capabilities for delinquencies, foreclosures, bankruptcies, evictions, payoffs, REOs, short sales, and document tracking. Our software includes an interactive collection module that monitors delinquencies and prompts a servicer’s representative to reach out to borrowers at specific times or under specific conditions, so nothing falls through the cracks.
MCC Mortgage Solutions also enables servicers to select a preferred language from 31 different languages. It alerts servicers when a loan could be affected by a recent disaster and also helps servicers meet requirements for delinquency reporting and loan tracking for both agencies and investors.
Learn more about MCC's servicing functionality here.
If you’d like to learn more about how MCC Mortgage Solutions can help you provide better service to your borrowers and stay compliant, give us a call at 248-350-9290 or drop us a note at firstname.lastname@example.org.