Many homeowners have needed relief during the coronavirus pandemic, and thankfully, aid has been available in the form of mortgage forbearance. Forbearance has allowed borrowers to pause their monthly mortgage payments without being reported as delinquent on their home loans. This has helped people preserve their credit scores and made it easier for them to recover from the financial impact of the pandemic.
Under normal circumstances, mortgage loan servicers can deny forbearance requests as they see fit. But under the CARES Act, the massive relief bill that was signed into law in March of 2020, any mortgage borrower who wanted to put a loan into forbearance had to be granted that option — loan servicers could not pick and choose.
But while mortgage lenders may be trying to do their best to help borrowers through these difficult times, some may have fallen short. In fact, in a recent report by the Consumer Financial Protection Bureau (CFPB), consumers submitted more mortgage-related complaints in March 2021 than in any other month since April 2018.
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What are mortgage borrowers unhappy about?
A large number of recent complaints among mortgage borrowers stemmed from issues relating to forbearance, reports the CFPB. Consumers also noted issues like not being able to easily reach their loan servicers and missing information about exiting forbearance.
The latter is a major concern right now. Mortgage forbearance was initially slated to last 12 months but was extended to 18 months during the pandemic. But soon, borrowers who put their home loans into forbearance at the very start of the pandemic will be coming out of it, and once they reach that point, they’ll need the support of their loan servicers to move forward.
The CFPB has already said that it expects loan servicers to step up and help borrowers through their forbearance exits. It’s also trying to ban foreclosures through the end of the year. As such, news that mortgage servicers haven’t been available to borrowers, or haven’t been as helpful as they could be with regard to forbearance exits, is troubling.
Another key complaint the CFPB noted in its March data is a delay in mortgage loan modification. Loan modification is an option for borrowers who come out of forbearance but can’t resume their normal monthly payments — say, because they’re still out of work or aren’t earning what they were before the pandemic began. With loan modification, a mortgage’s terms are altered. Often, that means the loan is extended so that payments shrink on a monthly basis, thereby allowing borrowers to keep up and stay in their homes. For example, a mortgage with 20 years left on it may be extended to 25 years to spread out those payments.
If consumer complaints continue to increase with regard to mortgage loan servicers, the CFPB may crack down by imposing penalties or implementing other consequences for those that fall short. At a time like this, preventing a massive wave of foreclosures is crucial. For that to happen, borrowers will need the support of their loan servicers — and anything less than stellar customer service may not be acceptable.
View more information: https://www.fool.com/the-ascent/mortgages/articles/mortgage-servicer-complaints-reach-3-year-high-reports-cfpb/