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The percentage of those cases was already higher than the historical average at the end of December 2021. The rising volume of foreclosure filings is expected to spur a high number of homeowners contestingforeclosure actions. Current CFPB director Rohit Chopra stated, “hile many mortgage servicers are successfully assisting borrowers to avoid foreclosure, today’s report highlights that some servicers are lagging their peers and are less well-equipped to assist borrowers.” Chopra added that the CFPB “will be closely monitoring mortgage servicer performance to ensure that they are meeting their obligations under the law.”įormer acting CFPB director Dave Uejio warned the CFPB, backed by the Biden administration, is “taking a close look at previous policies that hampered the bureau’s effectiveness.” They are also “simultaneously working nonstop through supervision and enforcement to ensure financial institutions are treating consumers fairly and playing by the rules.”Įxpect a Rise in Contested Foreclosures and Lawsuits On May 16, 2022, the CFPB issued a reportstudying mortgage servicers’ actions during the COVID-19 pandemic. The letters stated servicers have had sufficient time to plan for homeowners exiting forbearance and the termination of foreclosure moratoriums and that there is no excuse for any lack of preparedness. Officials in other states also distributed similar notices.
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In December 2021, New York Attorney General Letitia James distributed a letterto servicers operating in her state reminding them of their obligation to help homeowners impacted by the pandemic. But, of those, 72% aren’t paying.Īs if mortgage servicing wasn’t complex enough, servicers can anticipate increased scrutiny and enforcement actions by the federal and state regulators. The Federal Reserve Bank of Philadelphia report revealed that 45% of the mortgages that are now seriously delinquent and not in forbearance are on loss mitigation plans. Now that moratoriums have ended, we should expect an even larger surge of foreclosures.Īs foreclosure starts rise, servicers continue to utilize available loss mitigation programs to help borrowers avoid losing their homes. Another 37,000 were recorded in February and 36,000 in March. They jumped to around 56,000 in January alone. In January, foreclosure starts increased and began approaching numbers similar to what we saw before the pandemic. However, by January 1, 2022, many of those limitations expired. Here’s what will confront servicers in the upcoming months.īecause of the pandemic and resulting economic issues, the CARES Act foreclosure moratorium and subsequent Consumer Financial Protection Bureau (CFPB) temporary protections significantly limited foreclosure activities beginning in March 2020. That means there are a considerable number of borrowers that may be facing foreclosure when their forbearance ends.Īccording to Joe Davila, President and CEO of Selene Finance, in a recent interview with HousingWire, “Unless mortgage servicers can successfully execute home-retention options, many borrowers face the prospect of selling their homes or losing them.” As servicers offer support through loss mitigation options, servicers must balance operational considerations as well as being compliant with federal, state, and local regulatory requirements.
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The State of Post-pandemic Loss Mitigation Facing ServicersĪccording to a report released by the Federal Reserve Bank of Philadelphia, around 2.15 million mortgages were in forbearance or past due as of April 7, 2022.