A new report from the Consumer Financial Protection Bureau (CFPB) revealed many homeowners are struggling to make their monthly mortgage payments after exiting COVID-19 hardship forbearances.
The report was sourced from data by 16 large mortgage servicers between May and December 2021, and revealed that homeowners continue to face significant risks and challenges when it comes to paying their mortgages. The servicers used for the data collection service many types of loans including VA, FHA, GSE, PLS or portfolio, across many locations in the U.S. to give the CFPB a better understanding of how servicers are handling all areas.
"While many mortgage servicers are successfully assisting borrowers to avoid foreclosure, today's report highlights that some servicers are lagging their peers and are less well-equipped to assist borrowers who have exited pandemic housing protections," CFPB Director Rohit Chopra said. "We will be closely monitoring mortgage servicer performance to ensure that they are meeting their obligations under the law."
Homeowners are struggling to transition back into restarting their monthly payments, the report showed. By the end of 2021, 330,000 borrowers’ mortgage loans were delinquent and no longer in forbearance. These homeowners had no loss mitigation in place.
If you are struggling to make your monthly mortgage payment, you can potentially lower it by reducing your interest rate through a mortgage refinance. Visit Credible to find your personalized interest rate without affecting your credit score.
Homeowners struggle to work with mortgage servicers
One challenge that many homeowners cited in the CFPB's data was their inability to reach their mortgage servicer’s call center or get a timely response.
"Mortgage servicer call centers are vital links between the homeowner and servicer that answer homeowners’ questions and provide them with information to make important decisions about their loans," the CFPB stated in its report. "The extent of these challenges varied significantly among servicers."
In April 2021, the CFPB warned mortgage servicers to prepare for a surge of homeowners who'd need assistance, saying "unprepared is unacceptable."
"There is a tidal wave of distressed homeowners who will need help from their mortgage servicers in the coming months," then-CFPB Acting Director Dave Uejio said at the time. "Responsible servicers should be preparing now. There is no time to waste, and no excuse for inaction. No one should be surprised by what is coming."
Call metrics showed average hold times of more than 10 minutes and that call abandonment exceeded 30% for some mortgage servicers. Many metrics also indicated that borrowers have difficulty getting a live contact on the phone to discuss their mortgage questions.
If you are struggling with making your mortgage payments, consider refinancing to lower your monthly payments and even switch your servicer. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
What to do if you're struggling with mortgage payments
The CFPB's data showed that delinquency rates were higher for private student loans than federal loans, which ranged between 25% to 39% depending on the servicer. Delinquency rates for federally backed student loans ranged from 11% to 17%.
If you are struggling to make your mortgage payments, there are several options available to you. Here are a few:
1. Mortgage forbearance
Homeowners with federally backed loans such as those backed by Fannie Mae, Freddie Mac, the FHA or other government agencies, can apply for mortgage forbearance. It allows homeowners to pause their mortgage payments for a set period of time if they're struggling with a hardship. After the forbearance period is over, homeowners will have the option to pay back the missed payments in one lump sum, modify the monthly payments or add the missed payments onto the end of the loan.
2. Loan modification
Borrowers whose financial situation has been permanently affected can look into a loan modification. They can contact their servicer to talk about changing the terms of their loan like lowering their mortgage rate to reduce their monthly payments. Borrowers will need to show proof of financial hardship to their servicer.
3. Mortgage refinance
Borrowers — even those who are not facing financial hardship — can reduce their monthly payments through a mortgage refinance, which could change their loan term or reduce their interest rate. If you are interested in refinancing your mortgage, contact Credible to speak to a home loan expert and get all of your questions answered.
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