The Consumer Financial Protection Bureau (CFPB) is stepping up its oversight of mortgage servicing compliance with pandemic relief programs. This move comes because some observers have raised concerns that forbearance homeowners are not getting enough help to avoid foreclosure and others have raised concerns about discrimination.
As part of this effort, the CFPB could impose severe penalties on service providers found to have caused harm to borrowers.
Recently, the CFPB sent data requests to servicers for an insight into how they are handing over forbearance programs for hard-hit borrowers. According to Reuters, the agency has investigated some servicers for handling indulgence requests.
Continue reading: Can CFPB’s New Forbearance Rules Avoid A Foreclosure Crisis?
On April 12, the MBA estimated 2.3 homeowners to be lenient, which is 4.66% of the servicer’s total portfolio volume. Forbearance programs and foreclosure moratoriums, originally enacted by the Trump administration, were extended to late June earlier this year.
According to some sources speaking to Reuters, this move indicates a tougher stance by Democratic leaders and the Biden government towards the financial services industry. Where service staff have declined sharply following the COVID-19 pandemic and the launch of forbearance programs, it appears that the CFPB is now being given a more important enforcement role.
“The CFPB is focused on protecting consumers financially harmed by the COVID-19 pandemic,” a CFPB spokeswoman told Reuters.
“Part of that work is using our regulatory agency to ensure that mortgage service providers treat borrowers fairly and meet their responsibilities under federal law.”