mortgage forbearance

Apache is functioning normally

The total number of loans now in forbearance decreased by 5 basis points to 0.39% of servicers’ portfolio volume in July from 0.44% May, according to the Mortgage Bankers Association’s (MBA) monthly loan monitoring survey.

The MBA estimates about 195,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to about 7.9 million borrowers since March 2020.

The prevalence of forbearance plans has dropped dramatically since 2020 and the reasons that borrowers are in forbearance are changing, the MBA said.

“About two-thirds (69.3%) of borrowers are still in forbearance because of the effects of COVID-19, but a growing share of borrowers are in forbearance for other reasons that cause temporary hardship such as financial distress (24.2%) or natural disasters (6.5%),” Marina Walsh, MBA’s vice president of industry analysis said.”

“With the COVID-19 national emergency lifted, Fannie Mae and Freddie Mac recently announced the retirement of certain COVID-19 flexibilities relating to forbearance plans and workouts. Given the recent natural disasters impacting California, Washington, and Hawaii, forbearance is one way for mortgage servicers to mitigate the potential impacts on homeowners,” Walsh added.

Sorted by investor type, the share of Ginnie Mae loans in forbearance decreased 13 bps to 0.80% in July and the forbearance share for portfolio loans and private-label securities (PLS) dropped 7 bps to 0.45%. The share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.20% during the same period.

By stage, 36.5% of total loans in forbearance are in the initial forbearance plan stage, while 53.3% are in a forbearance extension. The remaining 10.3% are forbearance re-entries, including re-entries with extensions.

Washington, Colorado, Idaho, Oregon and California were the five states with the highest share of loans that were current – not delinquent or in foreclosure – as a percent of servicing portfolio. Louisiana, Mississippi, Indiana, New York, and West Virginia had the lowest share. 

Total loans serviced that were current as a percent of servicing portfolio volume decreased to 96.02% in July from June. 

Source: housingwire.com

Apache is functioning normally

At its Annual event Wednesday, Mortgage Bankers Association Chief Economist Mike Fratantoni forecast that mortgage rates could rise in the year to come, but that they will remain near all-time lows.

Fratantoni pointed out that the job losses seen in 2020 have been unprecedented, even when compared to the Great Recession.

“Yes, it’s come down to 10 million, but look at how that compares again to the peak in 2009 of 6.6 million,” he said. “This has just been a tremendous negative shock for the economy as a whole.”

However, due to the narrow industry focus of the job losses, this downturn has proved much different than what the economy saw in 2009. And the recovery will likely depend on how long the pandemic lasts.

“This distress is not going away soon,” Fratantoni said. “Many of these folks who thought they were on a temporary furlough are now reporting they have a permanent job loss. Many of the employers they thought they were returning to have gone bankrupt, and the longer this crisis lasts, the longer the restrictions are in place, and again, the public health demands that some of these restrictions remain in place, but the economic cost is real.

“And because you have so many people who are going to be displaced from what was the job they had chosen, that search for a new job in a new sector of the economy, even if it’s going to eventually be successful, is going to take more time, so we think the recovery from here is going to be a little slower than that what we have seen thus far in 2020,” he continued.

Earlier this year, the Federal Reserve ended its June two-day policy meeting  leaving rates unchanged and gave a strong indication that it will not raise interest rates for a long time. Fratantoni brought up this point, saying that short-term rates will stay at 0% at least until 2022 and said that we will see a very cautious Fed when it comes to raising rates from here.

However, he forecasted that mortgage rates will steadily rise over the next year. The chart below shows interest rates for the 30-year fixed-rate mortgage will end this year at about 3% and could hit around 3.3% in 2021.

Housing inventory and prices

Given the low interest rates that are driving demand, housing inventory has become a rising concern. MBA Associate Vice President of Industry Analysis Joel Kan explained that current inventory rests at just a three-month supply. He said as builders work to replenish the supply with new homes, the most recent census data shows a 1.1 million annualized pace for new construction — the highest level since 2007.

But while inventory is increasing, it is not happening fast enough, putting upward pressure on home prices. Kan explained estimates show an annual increase of about 4% to 5%, a trend that will continue in the year ahead.

Profitability

Before this year, 2003 was the last time a record was set for profitability on the origination side, and 2012 was the last record year for refinances. However, MBA Vice President of Industry Analysis Marina Walsh predicted 2020 could possibly set new records for profits for independent mortgage bankers.

MBA forecasts mortgage originations to total $3.18 trillion in 2020 – the closest we’ve gotten to 2003’s high of $3.81 trillion. In 2021, mortgage originations are expected to fall to around $2.49 trillion, which would still be the second-highest total in the past 15 years. At $1.54 trillion, next year’s purchase originations would eclipse the previous all-time high of $1.51 trillion in 2005.

“What’s interesting too, is look at that orange line, that’s the average production volume,” Walsh said. “Usually in our quarterly performance report, you would think that that’s an annualized number three, for 350 IMB at 1 billion. But 1 billion is the average for that particular quarter. So exceptionally high volume and exceptionally high profits as well.”

Servicing

On the servicing side of the business, elevated borrower delinquency rates – particularly for FHA borrowers – remain a concern. Top of mind for servicers will be pursuing the most appropriate loss mitigation strategies for post-forbearance borrowers and investors.

“Servicers will remain busy in 2021 helping borrowers exit mortgage forbearance and into longer-term solutions,” Walsh said. “This will likely result in the operational need for additional loss mitigation personnel and increased servicing costs.”

And while delinquencies hit all-time highs over 2020, Walsh explained the forbearance options kept foreclosures low and could continue to help borrowers into 2021.

Walsh said that as more loans fall into the seriously delinquent bucket, servicer costs could rise.

“Based on the data that we have now, productivity is actually continuing to increase, but that’s only for through the first half of 2020,” she said. “Same thing happened for those of you that were around in 2009, whereby we had very high delinquencies and our costs hadn’t quite caught up yet and as loans get more delinquent and are seriously delinquent, that’s when the real costs start to really come into play.

“We do expect in 2021 that as these loans are in the seriously delinquent stage, especially for servicers with large FHA pool — FHA loans as a percentage of their overall volume — we would expect to see the servicing costs go up and productivity drop and continued hiring of loss mitigation specialists,” Walsh said.

The pandemic effect

However, the MBA’s 2021 forecast assumes an effective vaccine will bring the COVID-19 pandemic under control, leading to a gradual economic recovery that is aided by further fiscal stimulus.

“The economy, labor market, and housing market have all seen meaningful rebounds since the onset of the pandemic, but there is still profound uncertainty,” Fratantoni said. “Additional waves of the virus could lead to further lockdowns and more job market instability.

“On the other hand, another pandemic-related stimulus package would result in faster economic growth and additional support for the housing market, albeit with slightly more upward pressure on mortgage rates,” Fratantoni added. “2021, particularly the second half, should be a year of continued purchase growth and slowing refinance activity.

“As long as the spread of the pandemic is brought under control, the economy should expand around 3% next year, allowing the job market to improve, incomes to rise, and home sales to meaningfully increase,” Fratantoni said.

Source: housingwire.com

Apache is functioning normally

As the COVID-19 national emergency draws to a close, the forbearance rate has decreased month over month, according to a report from the Mortgage Bankers Association (MBA) on Monday. While the MBA still expects a recession this year, credit quality is generally good, and borrowers facing financial hardship can access enhanced loss mitigation options, the trade group noted. 

The total number of loans in forbearance in March decreased five basis points from February, dropping to 0.55% from 0.60% of servicers’ portfolio volume. About 275,000 homeowners were in forbearance plans as of March 31.

The most significant improvement came from Ginnie Mae loans in forbearance, which declined 10 basis points to 1.18% in March. The forbearance share for portfolio loans and private-label securities (PLS) also dropped 10 basis points to 0.68%.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.26%.

“As the COVID-19 national emergency draws to a close, the number of loans in forbearance continues to drop,” Marina Walsh, MBA’s vice president of industry analysis, said. “Mortgage performance remains strong with the percentage of borrowers who were current on their mortgage payments and post-forbearance workouts increasing in March.”

The total for loans serviced that were current last month – which means not delinquent or in foreclosure – reached 96.35% of the portfolio, an increase of 59 basis points compared to February, according to the data.

The survey showed that 33.8% of total loans were in the initial plan stage last month and 52.9% were in a forbearance extension. The remaining 13.3% represented re-entries, including re-entries with extensions.

“MBA’s forecast still calls for a recession in 2023, which may change the current performance levels, but credit quality is generally good and many borrowers facing financial hardship can now access enhanced loss mitigation options that resulted from successes of pandemic-related policies,” Walsh said.

In March, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will enhance their payment deferral policies to allow borrowers facing financial hardship to defer up to six months of mortgage payments.

After the government-sponsored enterprises completed more than one million COVID-19 payment deferrals, the FHFA said it was making mortgage payment deferrals a key part of its standard loss mitigation toolkit for borrowers with eligible hardships.  

The goal of the mortgage payment deferral, which has a voluntary adoption date of July 1 and a mandatory adoption date set for October 1, is to promote sustainable homeownership and support, the FHFA said in March. 

Source: housingwire.com

Apache is functioning normally

Mortgage rates fluctuated again last week, down 5 basis points to 2.95% after managing to pop back up to 3% the week prior, according to Thursday data from Freddie Mac‘s PMMS. Mortgage rates have been hovering around 3% for over a month now, as macro economic factors left the bond market hesitant over the global recovery.

“Mortgage rates are down below three percent, continuing to offer many homeowners the potential to refinance and increase their monthly cash flow,” said Sam Khater, Freddie Mac’s chief economist. “In fact, homeowners who refinanced their 30-year fixed-rate mortgage in 2020 saved more than $2,800 dollars annually. Substantial opportunity continues to exist today, as nearly $2 trillion in conforming mortgages have the ability to refinance and reduce their interest rate by at least half a percentage point.”

Low rates not only save homeowners looking to refinance, they also help offset the steep increases in home prices. Steep competition — spurred by low mortgage rates, demographic factors and an improving national economy — is pushing home prices up at the strongest pace in a decade, with sales happening at lightning speed and often for well above list price.

Record low rates lit the fire under what was a scorching hot market in 2020 with some economists speculating rising rates may be the best option for cooling it back down. As rates rise, demand wanes and builders can catch up on the few months of inventory left for hungry borrowers.

“Mortgage rates over 3.75% should change the housing market landscape from its currently overheated state for both the new and existing home sales,” said Logan Mohtashami, HousingWire’s lead analyst.

How lenders can stay competitive as the refi boom slows

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Presented by: Computershare Loan Services

According to Mohtashami, the new home sector can’t compete with the existing home sales market in terms of price, so when mortgage rates increase, it’s more of a disadvantage to the new home sales market. If new home sales don’t grow, housing construction will slow down.

“We’ll see more inventory come to the market later this year as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes,” said Lawrence Yun, National Association of Realtors‘ chief economist. “The falling number of homeowners in mortgage forbearance will also bring about more inventory.”

Source: housingwire.com

Apache is functioning normally

The share of mortgage loans in forbearance decreased by five basis points in June 2023 relative to May 2023 to 0.44% from 0.49%, according to the Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey.

Since March 2020, mortgage servicers have provided forbearance to approximately 7.9 million borrowers and 220,000 homeowners are currently in forbearance plans.  

“Mortgage forbearance has declined because most homeowners have maintained or improved their financial health,” said Marina Walsh, the MBA’s vice president of industry analysis. “Recent reporting by the U.S. Bureau of Labor Statistics shows continued job growth in June, and a 3.6% unemployment rate. The employment situation tracks with homeowners’ ability to make mortgage payments.”

Walsh also added, “MBA forecasts a slowing in the economy that could give rise to higher unemployment and mortgage delinquencies later in the year. Forbearance remains a viable loss mitigation option for homeowners who may struggle under more challenging economic conditions.”

Sorted by investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior month to 0.93% from 1.06%. The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month to 0.21% from 0.23%. The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month to 0.52% from 0.58%.

Sorted by servicing portfolio volume, the share loans in forbearance for independent mortgage banks dropped to 0.56% from 0.64% in May. The share of loans in forbearance in depositories on the other hand decreased to 0.32% from 0.34%.

The vast majority of borrowers found themselves in such a place because of COVID-19 related repercussions (78.3%). Other major reasons were natural disasters (6.1%) and other temporary hardships such as a death, a divorce, a job loss or a disability.

In June, 34.9% of total loans in forbearance were in the initial forbearance plan stage, while 54.5% were in a extension. The remaining 12.6% were re-entries, including re-entries with extensions.

Washington, Idaho, Colorado, Oregon and California were the states with the highest rates of borrowers who were current. Mississippi, Louisiana, New York, Indiana and West Virginia had the lowest. Total loans that were current (not delinquent or in foreclosure) as a percentage of servicing portfolio volume was flat at 96.12% from the previous month.

Source: housingwire.com

Apache is functioning normally

At this point, most homeowners have probably heard of the CARES Act and its massive 12-month forbearance option for those with federally-backed mortgages.

It sounds pretty sweet – you can request six mortgage-free months, followed by an additional six months if you need it, with little paperwork or evidence of hardship from COVID-19.

Apparently, all you need is a mortgage forbearance letter and you should be good to go, assuming loan servicers don’t revolt and balk at the sheer number of requests that flood through the door.

Does Mortgage Forbearance Need to Be Repaid?

  • Yes, homeowners are expected to repay the missed mortgage payments
  • Loan servicers are NOT waiving payments, they are offering to delay them
  • The big question is how and when are homeowners supposed to catch up
  • Especially if the homeowner loses their job permanently or severely depletes their assets along the way

The million-dollar question is how will the skipped mortgage payments be paid back.

Remember, these aren’t waived mortgage payments, they are delayed mortgage payments.

You are getting a brief moratorium on payments while furloughed or out of work, after which time you must make good on those missed payments, assuming you do get back to work.

Everything is working on the assumption that this is a temporary situation, unlike the mortgage crisis a decade ago that was driven by fundamental issues, like sketchy mortgage financing and overpriced homes.

Most homeowners could afford to make their mortgage payments in the normal, pre-COVID-19 world, so once this is all over, they should go back to making their payments per usual.

There are a few issues with that theory. For one, we might not go “back to normal” right away or ever.

While the smart people in the room have a plan, or are at least working on one, to get us back on track as a society, much of what I’ve heard so far speaks of a gradual return.

For some industries, like big events, concerts, restaurants, bars, and anything that involves large crowds, it might be a much longer road back.

How does a homeowner who missed six to 12 mortgage payments simply return to making their payments if they don’t have a job, or even if they’ve lost tons of income and therefore depleted their assets along the way?

Surely you can’t expect these individuals to pay a lump sum right after the forbearance ends to make up for the shortfall. That would be ridiculous.

I would venture to say that most Americans don’t have the ability to make multiple mortgage payments at once, even during good times. So asking them to pay several during dire times seems absurd.

Fannie Mae and Freddie Mac’s Post-Forbearance Approach

  • Option #1: Reinstatement (pay in full at end of forbearance period)
  • Option #2: Repayment Plan (pay back within 12 months of end of forbearance)
  • Option #3: COVID-19 Payment Deferral (pay back eventually when you refi, sell, or pay off entire mortgage)
  • Option #4: Loan Modification (for those who can’t even afford to resume regular monthly payments)

Fortunately, Fannie Mae got to work and rolled out post-forbearance guidelines to put its loan servicers and homeowners at ease.

FYI, these mostly mirror the post-forbearance guidelines of Freddie Mac.

There is basically a waterfall approach where servicers will reach out to borrowers 30 days before their forbearance plan is scheduled to end.

At that time, they’ll work to determine which available assistance program will be best for them at that time depending on hardship status.

The preferred solution starts with reinstatement, where the borrower simply pays the full forbearance amount when the forbearance period ends.

While obviously an ideal end to forbearance, it’s highly unlikely many homeowners will be able to muster this.

That brings us to option two, which is a repayment plan where a portion of the forbearance amount is paid each month (for up to 12 months) along with the homeowner’s regular mortgage payment.

Again, this may fall short seeing that it requires a higher total monthly payment and it only lasts for a year.

Given the fact that homeowners may have missed six to 12 payments, it seems like a big ask to make up all those payments in the same amount of time.

That takes up to option three, COVID-19 Payment Deferral, which will likely be the most common outcome.

It allows borrowers who are unable to reinstate or afford a repayment plan to simply add the forbearance amount to the end of the loan.

And that amount won’t be due until the final mortgage payment is made, or earlier if the property is sold or the mortgage is refinanced.

In other words, homeowners get to kick the can down the road and worry about it later, which is a great deal.

Lastly, there is option four, the loan modification, which as the name implies, is pretty self-explanatory.

In the event the borrower can’t even afford to resume regular monthly mortgage payments (forget about the missed ones), they’ll need their home loan modified to make it affordable.

This may involve an interest rate reduction and/or a loan term extension, but probably not a principal reduction.

Additionally, Fannie Mae released guidance on mortgage forbearance waiting periods for those wondering when they get another home loan.

A Post-Forbearance Solution That Makes Sense for FHA Loans

  • Fannie Mae and Freddie Mac originally offered vague solutions involving loan modifications before rolling out the comprehensive guidelines above
  • This upset homeowners who thought they’d have to pay it all back in one lump sum things while their credit score took a hit
  • HUD has always had a good solution in its COVID-19 National Emergency Partial Claim
  • Missed payments would be set aside as an interest-free second mortgage that doesn’t need to be repaid until sale/refinance

The Department of Housing and Urban Development (HUD), which oversees the FHA loan program, put together a good Q&A regarding mortgage forbearance.

One question explicitly asks: Will the monthly mortgage payments that are reduced or suspended under a COVID-19 Forbearance need to be repaid?

They don’t mince words; “Yes. A homeowner with an FHA-insured mortgage who receives a COVID-19 National Emergency Forbearance is responsible for repaying the suspended mortgage payments or the balance of reduced mortgage payments.”

With regard to how, they say your loan servicer can help determine “options for eventually repaying any suspended mortgage payments or the balance due as a result of reduced mortgage payments.”

They note that you won’t be charged late fees and penalties while on a “COVID-19 National Emergency Forbearance plan.”

But what about after? Again, a great unknown.

However, HUD does have what appears to be a good solution to deal with the missed mortgage payments.

COVID-19 National Emergency Partial Claim

They have implemented the “COVID-19 National Emergency Partial Claim,” which can be put to work once the COVID-19 forbearance period ends.

In short, it reinstates borrowers’ home loans by authorizing loan servicers to advance funds on behalf of homeowners.

Those advances are placed in an interest-free subordinate (second) mortgage that the borrower doesn’t have to pay down until their first mortgage is paid off, either via home sale or mortgage refinance.

For me, this makes prefect sense assuming loan servicers are able to set aside all those missed payments for an unknown length of time.

It would actually allow homeowners who get back to work to return to making regular monthly mortgage payments, as opposed to making six or 12 of them at once, along with the next one due.

Nobody is going to make seven or 13 mortgage payments all at once, or anything close to that. Asking someone to make two at once is a longshot.

Meanwhile, Freddie Mac has said that it could offer “loan modification options to provide mortgage payment relief or keep those payments the same after the forbearance period.”

And Fannie Mae said, “a servicer must work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification.”

For the record, Fannie Mae’s Flex Modification adds past due amounts to the unpaid loan balance, then recalculates your monthly payments over the new, potentially revised loan term.

So that could work if monthly payments were only incrementally higher as as a result.

Fannie Mae and Freddie Mac also have a new payment deferral option that works similar to the partial claim solution that will be rolled out soon, but it only allows for 1-2 missed payments, not 6-12.

The VA has instructed loan servicers not to require a lump sum payment upon exiting forbearance.

Rather, they ask that they consider other options such as a repayment plan, where installments are made over time, or a loan modification, where a new payment schedule is established that includes the delinquent amount.

If the loan servicer wants to go the lump sum route, they ask that it be paid back at the end of the loan.

They have since added that borrowers may defer any missed payments, effectively making them due at the end of the loan term along with the final payment.

If that’s the case, the VA requires that amount to be non-interest bearing, which is great news for the homeowner.

You can pay toward that deferred amount over the life of the loan via a repayment plan or request a loan modification if you won’t be able to resume regular payments.

Ultimately, don’t homeowners need assurances regarding what happens after, before agreeing to mortgage forbearance?

And what about credit scores post-forbearance? Will loan servicers begin calling these homeowners delinquent at some point?

The forbearance isn’t supposed to count against them, but will the loan modification?

Will they have trouble refinancing post-forbearance, or difficulty financing a subsequent home purchase if they took part in the mortgage forbearance relief?

FYI, the last day to apply for mortgage forbearance is also a moving target.

There are too many unknowns right now, which makes it difficult for a homeowner to determine if taking the forbearance option is a good idea.

That being said, I don’t think it will stop millions of homeowners from taking part.

Read more: Number of Mortgages in Forbearance Jumps Nearly 1000%

Source: thetruthaboutmortgage.com

Apache is functioning normally

Most borrowers who had a mortgage forbearance in March 2021, including disproportionately impacted borrowers of color, were either current or closed as of March 2023. This is according to data released this week by the Consumer Financial Protection Bureau (CFPB) Office of Research.

In the immediate aftermath of the COVID-19 coronavirus pandemic’s onset, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 allowed millions of U.S. mortgage borrowers to enter public or private forbearance programs, which temporarily paused their mortgage payments.

Recent data from the national mortgage database compares the performance of mortgage borrowers in March 2023 to borrowers in March 2021 who had COVID-related forbearance, were delinquent but not in forbearance, and those considered current on their payments. Over the past two years, the CFPB has been vocal about its concerns regarding forbearance recovery, but the data shows generally positive outcomes.

“While we expressed concern in both 2021 and 2022 about borrowers’ ability to recover from periods of forbearance, our most recent analysis shows that the majority of borrowers in forbearance in 2021 – including Black and Hispanic borrowers – were largely able to become current on their payments by March 2023,” the report said.

In 2021, CFPB found that mortgage delinquencies were most common among Black or Hispanic borrowers; loans with a loan-to-value ratio of 60% or higher; borrowers living in majority-minority census tracts; and borrowers living in census tracts with lower relative incomes.

“[M]ortgages that were in forbearance in March 2021 are performing much better than loans that were 60 days or more delinquent in March 2021,” the CFPB found. “They’re performing, however, slightly worse than loans that were current in March 2021. Loans in forbearance in March 2021 were also less likely to be closed by March 2023 versus loans that were delinquent or current in March 2021.”

Among loans in forbearance in March 2021, more than 52% were current as of March 2023, a larger share than the 26% of loans that were 60 days or more delinquent two years prior. Generally, the positive outcomes are clear, the Bureau said.

“[T]he majority of borrowers, including Black and Hispanic borrowers, who had a mortgage forbearance in March 2021 were current as of March 2023,” the data said. “We also showed that borrowers in forbearance in March 2021 had a much lower likelihood of being delinquent or in foreclosure compared to borrowers who were 60 days or more delinquent in March 2021.”

Related research on CARES Act forbearances has illustrated that most borrowers became current either by self-curing or curing with assistance, including entering into a repayment plan, deferral or loan modification.

“The CFPB will continue to monitor how mortgage borrowers are faring as the economic recovery from the COVID-19 pandemic moves forward,” the report said.

Source: housingwire.com

Apache is functioning normally

The Consumer Financial Protection Bureau (CFPB) will look for ways to streamline and simplify mortgage servicing rules in the months ahead following public comment on how to reduce risks for borrowers having trouble with their mortgage payments, according to a blog post from CFPB Director Rohit Chopra.

Chopra noted in the post the importance of mortgage servicing rules to the ability for borrowers to keep up with their loans — despite servicers being chosen by the lender and not the borrower, he said.

“In the mid-2000s, predatory mortgage practices spread throughout the country,” Chopra wrote. “Many large financial institutions with mortgage servicing operations experienced serious breakdowns. This resulted in a crisis where 10 million homes ended up in foreclosure between 2006 and 2014. The foreclosure crisis was an important catalyst for the creation of the Consumer Financial Protection Bureau.”

In addition to the founding of the CFPB and the implementation of the first mortgage rules in 2014, the pandemic has highlighted how certain servicing rules operate in adverse conditions — particularly in relation to a spike in the national unemployment rate.

“The CFPB observed that there were places where the rules could be revised to reduce unnecessary complexity,” Chopra said. “Last fall, the CFPB asked the public for input on ways to reduce risks for borrowers who experience disruptions in their ability to make mortgage payments, including input on the mortgage forbearance options available to borrowers. In particular, we sought input on the features of pandemic-related forbearance programs and whether there are ways to automate and streamline long-term loss mitigation assistance.”

Stakeholders, including housing organizations, homeowner advocates and mortgage servicers, noted that the borrowers requiring mortgage assistance regularly face complexity and paperwork that impacts both the borrowers and servicers.

“According to commenters, the temporary pandemic-related changes we made to the mortgage servicing rules helped alleviate this problem and get borrowers accommodations more quickly,” Chopra wrote. “Commenters also expressed concern that borrowers often incur servicing fees and experience negative credit reporting while waiting for their mortgage servicers to review their options.”

As a result, the CFPB will investigate and seek out input on ways that mortgage servicing rules can be streamlined and simplified, Chopra said.

“When homeowners who struggle to make payments get the help they need without unnecessary delay or hurdles, it is better for borrowers, servicers, and the economy as a whole,” Chopra wrote. “The CFPB will be using this input from commenters to propose ways to simplify and streamline mortgage servicing rules.”

The CFPB will propose to streamline certain rules “only if it would promote greater agility on the part of mortgage servicers in responding to future economic shocks while also continuing to ensure they meet their obligations for assisting borrowers promptly and fairly,” Chopra stated.

Source: housingwire.com

Apache is functioning normally

What happens when mortgage forbearance ends? On today’s State of the Market podcast, Auction.com’s Daren Blomquist joins us to discuss the possibility of a massive wave of foreclosures hitting the market. We talk about current property prices, dive into detailed foreclosure stats, and more. Tune in and get information on everything you need to know as a Realtor, investor, or prospective homebuyer.

Listen to today’s show and learn:

  • The shadow inventory of foreclosures [4:41]
  • Daren’s thoughts on what will happen to properties in forbearance [8:21]
  • The average equity loss for properties in forbearance [11:23]
  • Foreclosures in Texas [14:37]
  • Bubble or boom? Daren’s thoughts on housing prices [19:48]
  • Why the first-time-homebuyer tax credit is the wrong solution [24:29]
  • The eviction moratorium’s impact on landlords [26:37]
  • Daren’s foreclosure stats [34:22]
  • The average price of foreclosure sales compared to total debt [40:47]
  • Where to find more of Daren’s foreclosure research [42:16]

Daren Blomquist

Daren Blomquist is Auction.com’s new Vice President, Market Economist.  Recently, Daren served as Vice President at Attom Data Solutions where he was widely recognized as an authority in the housing and mortgage industries. In his new role, Daren focuses on analyzing and forecasting complex macro and microeconomic data trends within the marketplace and greater industry.

Daren mines real estate data for key insights and trends to help businesses and consumers make better decisions. Prior to Auction.com, Blomquist directed ATTOM Media, a division of ATTOM Data Solutions, which publishes original real estate reports and analysis.

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Apache is functioning normally

Source: hibandigital.com