On April 13 of this year, we posted a blog informing everyone of pending CFPB action to lessen the potential for thousands of homes being foreclosed. As we are nearing the June 30, 2021, forbearance deadline, we are actually seeing some light at the end of the tunnel. Although CFPB has not yet announced another forbearance moratorium extension, the country has managed to set itself in the other direction thus far without a new federal mandate for GSE’s and conventional lenders.
As you may recall, CFPB warned that they would put greater controls in place to mitigate a rising rate of foreclosures by strongly suggesting the following actions:
- Being proactive.Servicers should contact borrowers in forbearance before the end of the forbearance period, so they have time to apply for help.
- Working with borrowers.Servicers should work to ensure borrowers have all necessary information and should help borrowers in obtaining documents and other information needed to evaluate the borrowers for assistance.
- Addressing language access.The CFPB will look carefully at how servicers manage communications with borrowers with limited English proficiency and maintain compliance with the Equal Credit Opportunity Act and other laws.
- Evaluating income fairly.Where servicers use income in determining eligibility for loss mitigation options, servicers should evaluate borrowers’ income from public assistance, child-support, alimony, or other sources in accordance with the Equal Credit Opportunity Act’s anti-discrimination protections.
- Handling inquiries promptly.The CFPB will closely examine servicer conduct where hold times are longer than industry averages.
- Preventing avoidable foreclosures.The CFPB will expect servicers to comply with foreclosure restrictions in Regulation X and other federal and state restrictions in order to ensure that all homeowners have an opportunity to save their homes before foreclosure is initiated.
Here is what we know as of the end of May:
- CFPB found that Black and Hispanic homeowners are more than twice as likely as White homeowners to be behind on their mortgage payments as of the end of Q1 this year. In a new report released by CFPB approximately 662,000 mortgage loans for owner-occupied properties through March 21 are behind in payments. According to The New York Post, CFPB found that 33% of the borrowers had loans in forbearance and 27% were delinquent. The Post considers this alarming as Blacks and Hispanics make up only 18 percent of all mortgage borrowers
“What this report shows, which is consistent with all the other data that we know, is that Black and Hispanic communities were hardest hit by the crisis, slowest to recover and the most vulnerable to mortgage shocks,” said Diane Thompson, senior adviser to the CFPB director. “We are seeing significant portions of the population who are just not benefiting from the recovery the way other parts of the population are.”
- Less than a month ago, approximately 3 million people were behind on their mortgage. According to the CFPB, this is the most at any time since the great Recession. “We must not lose sight of the dangers so many consumers still face, “CFPB Acting Director, Dave Uejio said in a statement as the agency works to ease the process and protect homeowners. “Millions of families are at risk of losing homes to foreclosure in the coming months, even as the country opens back up.”
- According to Mortgage Bankers Association, as of the end of May, nearly 2.1 million homeowners are still in forbearance plans. And Black Knight estimates that an additional “1.8 million homes are not in forbearance but at least 90 days delinquent on paying their mortgage.”
- As stated in a Forbes article at the end of May, “inside the latest stimulus package, there’s a lesser-known type of Covid-19 relief…while most Americans are focused on $1400 stimulus checks, there’s also nearly $10 billion of Coronavirus mortgage relief available to help millions of homeowners pay their mortgage.” This money comes from the U.S. Treasury department and is given to individual states based on the number of foreclosures they are expecting along with the rate of unemployment. States have until September 30, 2025 to spend these dollars.
There was a hearing on Wednesday May 26, 2021 where senators asked the CEOs of Bank of America, Chase and Wells Fargo, “What do you plan to do to help Americans caught in this situation?”
This is how the three big banks responded about the action they plan to take after the June 30, 2021 forbearance deadline:
Wells Fargo: “For the loans that we own, we have extended our moratoriums for foreclosures and evictions until the end of the year,” says CEO, Charles Scharf. CNBC Make It followed up with Wells Fargo and another representative who reiterated that all foreclosures and evictions are on hold until after the end of 2021. “We support the CFPB’s efforts to make this apply for the whole industry, but we are not waiting for them to make this decision where we service mortgages for ourselves.”
Bank of America: Brian Moynihan, CEO, delivered a promising statement. Not only would the bank suspend its foreclosures until the end of 2021, but that their delinquency rate has fallen by 90%. “The good news is the amount of deferrals is way down, and most of the clients have become current. Irrespective of that deadline passing (referring to the June 30, 2021 moratorium), we’ll continue to work with a few clients we have left to help them.” The bank’s practices will extend to both bank-owned and government-backed loans.
JPMorgan Chase: CEO Jamie Dimon failed to comment on when Chase planned to resume foreclosures and evictions. But Chase, like Bank of America, has seen about 90% of its loans come out of forbearance programs. CNBC Make It reports that “the Chase spokesperson said the bank is continuing to align with the various state and federal foreclosure moratorium deadlines for all loans in its portfolio. On the federal level, that deadline is currently set for June 30.”
Speculation for what June 30, 2021 will look like has taken a slightly different turn than some may have expected. In January, many reporting entities cried, “the sky is falling” and it will fall bigger and harder than what we saw between 2008 to 2012 when 4 million homes were foreclosed. But with banks reporting forbearances down by 90%, and the foreclosures expected at 2.1 million, we can remain hopeful.
Adding to that anticipation, President Biden is expected to extend the foreclosure moratorium to December 31, 2021. As it stands today, we are two weeks away from the moratorium deadline. Servicers are waiting to switch gears from Refis and Loan Originations to Foreclosure Services. One thing is certain, we are much better prepared today than we were in 2008. Stay tuned for the final decision on June 30. Nexval will keep you right up to date and be here to help with whatever you need.