New rule ensures mortgage servicers provide options to potentially vulnerable borrowers exiting forbearance

As of September, approximately 1.6 million borrowers are exiting mortgage forbearance programs. As servicers expand their operations to match the surge of forbearance exits, servicers should remember that not all borrowers are similarly situated. Many borrowers may be vulnerable to a greater risk of harm due to a variety of personal circumstances, including poor health, mental decline, disability, caregiving for a child or loved one, having limited English proficiency, inadequate access to technology, or being a first-time homeowner. The effects of the COVID-19 pandemic may have exacerbated some of these vulnerabilities.

The CFPB’s final rule amending Regulation X to assist mortgage borrowers affected by the COVID-19 emergency became effective on August 31. The final rule establishes temporary procedural safeguards to help ensure that eligible borrowers have a meaningful opportunity to be reviewed for loss mitigation before the servicer can make the first notice or filing required for foreclosure on certain mortgages.

The CFPB also issued a Compliance Bulletin on April 1, 2021. The Bulletin explained that, consistent with the flexibilities announced in the April 3, 2020 joint statement, the CFPB expected servicers to manage communications with limited English proficiency borrowers while maintaining compliance with applicable laws and to maintain policies and procedures that are reasonably designed to achieve the continuity of contact objectives to ensure that delinquent borrowers receive accurate information about their loss mitigation options.

In August, the CFPB published a report detailing 16 large mortgage servicers’ COVID-19 pandemic response. That report noted that nearly half of mortgage servicers do not track borrowers’ language preference to assist customer who have limited English proficiency (LEP). The Bureau notes that, where appropriate and consistent with the law, servicers that track consumer language preference may be in a better position to more rapidly respond to the unique needs of these borrowers, such as connecting them to bi-lingual customer service agents or language line services.

To avoid the risk of harm to borrowers, the CFPB also encourages servicers to enhance their communication capabilities and outreach efforts to educate and assist all borrowers in resolving delinquency and enrolling in widely available assistance and loss mitigation options. The CFPB also encourages servicers to ensure that their compliance management systems include robust measures to identify and mitigate fair lending risk.

Similarly, one-size-fits-all policies, practices or procedures could unintentionally harm vulnerable consumers. For example, servicers implementing across-the-board customer service call time goals without exceptions may not be taking into account that some borrowers will require more time than others to fully understand their mortgage relief options and communicate with a customer service agent, sometimes in a language other than English. Servicers should consider adjusting internal metrics when customer service agents are communicating with LEP customers or using technology to assist borrowers who may have difficulty hearing or a disability.

Other resources and guidance issued by the CFPB may assist servicers in meeting their obligations to serve all borrowers, including those with limited English proficiency. For example, on July 2, 2021, the CFPB published a Spanish translation of the Early Intervention Written Notice Model Clauses , which servicers may use. In addition, the CFBP published resources that focused on reverse mortgage borrowers, people with disabilities and Native communities .

The CFPB continues to educate borrowers facing delinquency about enrolling in widely available assistance and loss mitigation options, including obtaining help from a HUD-approved housing counseling agency. The CFPB will continue its oversight work through examinations and enforcement, and it will hold servicers accountable for complying with existing regulatory requirements, as well as the amended Mortgage Servicing Rules that took effect August 31, 2021.