Director Kraninger Remarks During National Association of Realtors 2020 Legislative Meetings
Good afternoon. It would have been great to see all of you in person, but I thank you for the opportunity to be with you here today virtually during these difficult and unprecedented times.
The Consumer Financial Protection Bureau and the National Association of Realtors share a common interest: protecting consumers in the housing market. COVID-19 is having a devastating impact on our country and our economy - especially on the origination and servicing of mortgages. So I will focus very closely on these issues in my remarks to you. Today I’d like to give you a high-level snapshot of what we are hearing directly from consumers through our consumer complaint process, and what the data says about the impact of COVID-19 on households. Then I will shift to talk about how we are helping consumers during this time and ensuring they have information on their rights, protections, and options. And, finally, I want to focus on some specifics in the housing market.
First, let’s talk about what we are hearing from consumers.
Consumer complaints have always provided the Bureau with valuable insights into the challenges consumers are experiencing with financial products and services. And we have used those insights to inform all of the Bureau’s work, including supervisory and enforcement activity. The Bureau also shares consumer complaint information with federal and state agencies to ensure that the Bureau and other regulators have useful information to support consumers.
During this public health emergency, the Bureau has continued to handle consumers’ complaints about financial products and services. In March and April, the Bureau received approximately 36,700 and 42,500 complaints respectively – the highest monthly complaint volumes in the Bureau’s history.
To help the Bureau monitor challenges consumers are experiencing in the marketplace, the Bureau has built tools to identify and analyze coronavirus-related complaints. These tools have helped us understand what consumers are experiencing in the marketplace. And as the pandemic evolves, they help us see what is shifting in terms of products and issues.
While credit reporting and debt collection continue to receive the most complaints overall, for consumers mentioning COVID-19 and related terms, mortgages and credit cards currently top the list.
A significant portion of complaints as a result of the pandemic are about issues consumers encounter when seeking alternative payment options for their mortgages, credit cards, auto loans and leases, student loans, and other loans. Consumers report that they are seeking changes to loan terms, such as suspension of payments, lower interest rates, longer loan terms, and other ways to postpone or lower monthly payments because they have lost their jobs or are working fewer hours. A growing concern for many is the notion that they would have to make a balloon payment at the end of the mortgage forbearance. The Bureau works hard to identify these issues and get consumers answers – I’ll come back to this last point.
The research about the impact of COVID-19 on households reinforces these consumer concerns.
We know that prior to the pandemic, many households were not prepared to weather an extended period of income drop. According to the Bureau’s 2019 “Making Ends Meet” survey, 52 percent of households would not be able to cover expenses for more than two months if they lost their main source of income by borrowing, using savings, selling assets or seeking help from friends or family.
We have already started to see the effects of the pandemic – given your role in the mortgage market, you unfortunately know this well. According to the Bureau’s Consumer Credit Panel, new mortgage inquiries were down almost 27 percent by the end of March for consumers who did not already have a mortgage. Revolving credit card inquiries declined by 40 percent, and auto loan inquiries dropped by 52 percent.
We are monitoring the increases in the number of homeowners who need forbearance and the dips in the new mortgage inquiry numbers. This is of concern to many and I know we will all come together to weather this storm. After all, we have a common goal: mortgage transactions that turn out successfully for borrowers.
As soon as the crisis hit, the Bureau focused its four tools of regulation, supervision, enforcement, and education on ensuring consumers were protected during this pandemic. Let me take a moment to offer some overviews of how we are accomplishing this.
As consumers seek temporary relief from lenders, the pandemic is impacting the staffing and operations of financial companies that want to help the large influx of customers seeking help and accommodations. In response, the Bureau took temporary and targeted actions to support consumers by allowing financial companies to focus their resources on assisting their customers. This includes providing flexibility on some data collections for industry on Bureau-related rules. The Bureau relaxed the expectation of new quarterly HMDA data reporting by certain mortgage lenders. Though entities must still collect and record HMDA data throughout the year in anticipation of making their annual filings in 2021. The Bureau also will not expect the timely reporting of certain information related to credit card and prepaid accounts under the Truth in Lending Act, Regulation Z, and Regulation E.
As we continue to monitor the evolving landscape across all the markets we regulate, we intend to continue to issue additional guidance to facilitate the ongoing productive and collaborative relationship between companies and their customers during this time.
While we are willing to work with companies in a temporary and targeted manner to help them help their customers, we will not tolerate those who would exploit the current crisis at the expense of consumers. We are committed to vigorously enforcing consumer financial law in all markets under our jurisdiction and the pandemic does not change that. Indeed, we will not hesitate to take public enforcement action against companies or individuals that engage in unfair, deceptive, or abusive acts or practices, or otherwise violate the law. We are monitoring the marketplace in real time and coordinating on an ongoing basis with federal and state agencies and regulators.
The last tool in our toolbelt is education. The Bureau’s education work in these times is critical. As the economic storm surges around us, the Bureau wants to be a rock for consumers. We aim to be the trusted resource that consumers can turn to for the latest, most accurate information on how to navigate these difficult times.
As soon as the outbreak hit, the Bureau began publishing resources to help consumers protect their finances. We are providing them with resources on what scams they should be watching out for, how to protect their credit, and their mortgage options during this uncertain time. We have provided specific information to our vulnerable populations, including older Americans, students, and servicemembers. Staying informed, engaged and proactive will help consumers weather this crisis.
Finally, later today, the Bureau will be unveiling a unified, interagency housing website to be the one stop shop for consumers during this pandemic.
The needs is greatest for those who have experienced job loss or loss of income due to the pandemic. One of their biggest concerns right now is being able to pay the mortgage. As you are aware, the CARES Act provided important relief to struggling homeowners to receive assistance on their federally-backed mortgages. Struggling borrowers can request up to 180-days forbearance and if they still need assistance, they may request another 180 days. Additionally, if consumers do not have a federally-backed mortgage, many loan servicers have forbearance or deferment options for non-government backed or private loans.
The CARES Act also provided a moratorium on evictions for consumers who are renting from an owner who has a federally backed mortgage, or if they live in federally subsidized housing or get a federally subsidized grant or voucher.
There are a lot of options available to both homeowners and tenants during this time. The most important thing is to ensure that they have access to accurate, impartial information to be informed of their options and make the best decision for their situation.
HUD, FHFA, USDA, and the VA partnered with us to develop this one stop shop for consumers. We are launching a campaign to ensure that we reach as many people as we can, but I urge you to help us in spreading the word to consumers. You can find our website at cfpb.gov/housing.
I do want to stress that we are telling struggling borrowers to reach out to their servicers to see what options are available to them. If a consumer has an issue with their servicer, we encourage them to submit a complaint to us if the consumer can’t first resolve the matter with the servicer.
Because our mortgage work has been front and center during this emergency, the Bureau has worked to address issues and help consumers get the help they need from servicers and continue to access mortgage credit.
This has all been happening while our normal work in the mortgage world continues. We are working hard on rulemakings that address the QM Patch and LIBOR transition. We released guidance on servicing transfers to minimize consumer harm and disruption. And we released the final rule that increased HMDA thresholds to provide regulatory relief to smaller financial institutions.
In conclusion, the Bureau is here to stand beside consumers at their hour of need. As the pandemic crisis evolves, we must be at the ready to address shifting needs. So we continue to monitor the marketplace and engage with stakeholders and partners to identify emerging trends and potential consumer issues related to this crisis.
During this challenging time, I appreciate the commitment of everyone to come together and help consumers. We are all in this together and helping every consumer in need is our goal.
As was noted in my introduction, I worked in government during 9/11 and one of the things that struck me most was how Americans come together during a crisis. Regardless of how we identify based on where we live or our beliefs, we band together in time of need and help each other. I know that we have already been doing that and will continue to do so during the pandemic.
I look forward to your questions. Thank you.
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.