“We are committed to working with the CFPB and other government agencies, the mortgage industry, community leaders, mortgage investors/guarantors and others in determining how to best serve our customers and communities, particularly racially and ethnically diverse communities that have been disproportionally impacted by the pandemic,” Wells Fargo said.
Carissa Robb, president and chief operating officer of Constant AI, a fintech providing automated loss mitigation, said the proposal could have potentially negative consequences on the larger housing market.
“Whether you agree to disagree with the proposal, the industry https://americashpaydayloan.com/title-loans-ga/ should also prepare for the consequences of such a moratorium, including the fact the strength of the housing market today may suffer, reducing property values and increasing deficiencies post-sale as an abundance of distressed properties flood the market over the next 24+ months,” Robb said.
“It will also introduce an increase of strategic defaults where the proposed regulations weaken the ability to enforce delinquency consequences; this population and credit risk is separate and apart from those exposed by unfair actions of servicers. We’re more than a year into the pandemic and more than a decade past the Great Recession – we have the tools and experience to do a better job at mitigating loss this time around,” Robb said.
The MBA’s current president and CEO, Robert Broeksmit, wrote an article today pointing out that the CFPB’s own 2020 consumer response report demonstrates how well servicers have been helping borrowers in forbearance. 5%, and complaints against mortgage servicers were actually down, by 3.5%.
Servicers need the flexibility and running room to navigate the delicate balance between keeping loans active and making payments to their investors
In less than 10 weeks, Broeksmit noted, mortgage servicers successfully helped 4.3 million Americans enter forbearance plans. And according to Black Knight, servicers have advanced almost $19 billion in unpaid principal and interest to investors in the past year.
“We have a long and uneven road ahead of us, but the past has been insightful; no one wins when a loan fails,” Broeksmit said. “The ability for the industry and mortgage servicers to overcome the obstacles created by COVID-19 will depend on our ability to work together, listen and learn, and keep the best interests of the nation’s borrowers and lenders front and center.”
The CFPB has said it is watching servicers closely as they manage borrowers in forbearance. Last week the Bureau warned servicers that it is ramping up enforcement and will be specifically watching how they manage borrowers coming out of forbearance. This followed an earlier announcement where the Bureau announced it was rescinding seven of its temporary policies with special COVID flexibilities, effective April 1.
I agree with Mssrs. Stevens’ and Broeksmit’s concerns and arguments. The industry needs standards of performance issued by the CFPB. It should embrace the end goal of avoiding foreclosures where possible. This being said, most seasoned servicers will agree that foreclosure is a last resort. By arbitrarily establishing a period of no-foreclosures, the incentive to borrowers to work with their mortgage servicer for a reasonable solution weakens the servicers’ ability to work out acceptable terms with their borrowers. That some servicers will move quickly to foreclosure can be managed by the existing regulations and standards established by the CFPB and increased oversight on the part of the CFPB.
Wells Fargo, one of the largest servicers in the U.S., said it supports the CFPB’s latest proposal and looks forward to commenting on it while simultaneously working with the organization to choose the best course of action for consumers.