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August 11, 2021

Surviving and Thriving Under CFPB Scrutiny

The Consumer Financial Protection Bureau issued its 2020 report on supervisory examination findings at the end of June. Earlier this week, they published an additional report focusing more specifically on 16 large mortgage servicers. Both publications highlight the pandemic’s effect on the servicing industry and the consumers they impact. These reports also spotlight the fact that the CFPB is earnestly focused on helping consumers avoid foreclosure, especially as federal protections expire. So the question becomes, how do mortgage servicers survive and continue to thrive as examinations and performance metrics are used to further scrutinize the performance of this overburdened segment of the industry?

Evaluating metrics

CFPB Supervisory Highlights

The CFPB Supervisory Highlights underline “the importance of the Bureau’s supervisory work, including during the COVID-19 pandemic, but consumers are still struggling, and we will stay vigilant,” notes CFPB Acting Director Dave Uejio. This report details issues that did not lead to enforcement action, but were cited and resolved as a part of the past year’s supervisory examinations. The major concerns for mortgage servicing occurred as violations of Regulation X and were twofold. First, there were servicers that submitted foreclosure notifications or filings without proper consideration of appeals submitted or appeals available for submission by the borrower. Additionally, servicers were cited for implying that they would not begin foreclosure activities until a stated date and subsequently started actions at an earlier date.

Mortgage Servicing Metrics Report

The recently released Mortgage Servicing Metrics Report takes this summer’s Supervisory Highlights a step further, delving into examination data and seeking to gain a more articulate understanding of the relationship between servicer and borrower during the pandemic. Uejio again voiced the CFPB’s stance, noting that they “will hold accountable those servicers who cause harm to homeowners and families.” To this end, the CFPB is monitoring specific data metrics:

  • Call metrics – The volume of call center inquiries is tracked and analyzed in terms of the Average Speed to Answer (ASA), Abandonment Rates (AR), and Average Handle Time (AHT).
  • Pandemic forbearance exit metrics – The volume of exits from COVID-19 hardship forbearances is measured, including metrics on the current borrower status, resumed repayment under existing plans, enrollment in further loss mitigation plans, and continued delinquencies.
  • Delinquency metrics – Overall delinquency rates are measured by the servicer as defined under Regulation X. This is “the date a periodic payment sufficient to cover principal, interest, and, if applicable, escrow becomes due and unpaid.”
  • Borrower profile metrics – Borrower status in terms of Limited English Proficiency (LEP) and race are captured. There are inconsistencies in how this data is collected, and the lack of data can indicate fair lending violations.

Given that mortgage servicers are subject to persistent scrutiny as the status of the pandemic itself remains questionable, one cannot help but wonder if the situation will worsen before it gets better. Is your organization positioned to survive further examination and analysis by the CFPB, as well as other government agencies and investors? Can you continue to thrive if the industry is again faced with pandemic shutdowns, further delinquency, and another round of loss mitigation relief program administration?

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Jane Mason | @janemasonceo

Jane has applied her vast experience (over 25 years) operating process-driven businesses to successfully redefine client-focused service. Jane has worked with expert programmers to apply cutting-edge web-based technology to automate complex processes in industries such as Financial Services, Healthcare and enterprise workflow. Her vision confirms Clarifire's trajectory as a successful, scaling, Software-as-a-Service (SaaS) provider. A University of South Florida graduate, Jane has received many awards related to her entrepreneurial skills.
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