The Consumer Financial Protection Bureau (CFPB) recently released a report that found that the streamlined process for mortgage forbearance during the pandemic still caused confusion for many borrowers. The report, which was based on a survey of 1,000 borrowers who had entered forbearance during the pandemic, found that:
- 30% of borrowers did not know what forbearance was or how it worked.
- 40% of borrowers said they had difficulty understanding the terms of their forbearance agreement.
- 20% of borrowers said they were not able to get the help they needed from their servicer during the forbearance period.
The CFPB’s report also found that the streamlined forbearance process was not always effective in preventing foreclosures. Of the borrowers who entered forbearance during the pandemic, 5% eventually lost their homes to foreclosure.
The CFPB’s report raises concerns about the effectiveness of the streamlined forbearance process and the potential for borrowers to face financial hardship after the pandemic ends. The CFPB is recommending that servicers take steps to improve borrower understanding of forbearance and to provide more support to borrowers who are struggling financially.
The CFPB’s report comes as the Biden administration is considering extending the foreclosure moratorium, which is currently set to expire on June 30. The administration is also considering providing additional financial assistance to homeowners who are struggling to make their mortgage payments.
The CFPB’s report is a reminder that the COVID-19 pandemic has had a significant impact on the mortgage market. Servicers and borrowers need to be aware of the potential risks and challenges associated with forbearance and take steps to mitigate those risks.
Kind regards J. Ross.
