As of March 1, 2022, over 768,000 mortgage borrowers remain in active forbearance. Many of these consumers are seriously delinquent and at risk of foreclosure unless they receive loss mitigation assistance from their servicers. The CFPB remains focused on preventing avoidable foreclosures to the maximum extent possible and expects mortgage servicers to do the same.
Funds from the Homeowner Assistance Fund (HAF) can help homeowners avoid foreclosure, but only if mortgage servicers work with state housing finance agencies and HUD-approved housing counseling agencies to help borrowers as they complete the HAF application process. The HAF is a federal program that provides money to states, tribes, and territories to assist homeowners with housing-related costs. For example, HAF funds may be used to pay down the amount consumers owe on their mortgage, allowing consumers to enter loan modifications with lower payments. The specific programs and borrower-approval processes are designed by each state, tribe, or territory and will vary.
Expectations of Servicers
The CFPB strongly encourages servicers to participate in HAF programs. While servicer participation in HAF programs is voluntary, HAF funds can prevent avoidable foreclosures. Accepting HAF funds can be a pivotal factor to resolve delinquencies and to help prevent avoidable foreclosure for some homeowners.
The CFPB also encourages servicers to provide training and information to customer service representatives regarding the HAF program. In general, servicers must provide borrowers accurate information about the loss mitigation process, including, when applicable, accurate information about the servicer’s participation in the HAF program and how to communicate with the servicer throughout the HAF application process.
The CFPB also reminds servicers participating in HAF programs that they are responsible for maintaining policies and procedures reasonably designed to ensure that they properly evaluate loss mitigation applications. This includes providing accurate information about loss mitigation options, such as those related to HAF, available to a borrower from the owner or assignee of the loan. Servicers should review their existing policies and procedures to ensure that borrowers are not improperly referred to foreclosure, for example, especially while a servicer is working with a borrower during the HAF application process or waiting for payment of HAF funds.
The CFPB is to ensure that they are complying with all applicable federal consumer financial laws and assisting consumers with resolving delinquencies and preventing avoidable foreclosures. As part of this monitoring, the CFPB will continue its heightened review of mortgage servicing complaints, including in particular complaints about challenges working with servicers to use HAF funds. The CFPB encourages servicers to provide borrowers with sufficient time to move through the HAF application process prior to proceeding with foreclosure. Foreclosing on a homeowner while a HAF application is pending undercuts the congressional purpose in allocating this money, increases avoidable foreclosures, and will merit increased scrutiny.
Help for Homeowners
Consumers who wish to learn more about the HAF can access the CFPB’s Housing Hub page. For help talking to your mortgage servicer or understanding your options, contact a HUD-approved housing counseling agency in your area. Housing counselors can help you develop a tailored plan of action and work with your mortgage company, at no cost to you.