DS News

DS News June 2021

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

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Page 75 of 99

74 e Consumer Financial Protection Bureau (CFPB) once again raised warning flags for the mortgage industry with their recent proposal to prohibit servicers from initiating foreclosures until after December 31, 2021. However, regardless of the proposed rules, the need for streamlined, scalable processes to address a sudden influx of hardship requests is becoming increasingly urgent. Media outlets have focused on the CFPB's message to servicers regarding its intent to strengthen oversight and enforcement action. Servicers should be going a step further to examine their preparedness for preventing unnecessary harm to their consumer base. While illegal or invalid foreclosure actions will continue to be closely monitored, the true exposure lies with actions that can potentially trigger unfair, deceptive, or abusive acts or practices (UDAAP) violations. e existing rule under Reg X generally prohibits a servicer from noticing or filing a foreclosure action until the borrower is more than 120 days delinquent. e current proposal provides additional guardrails to fully suspend any first notice or filings against a primary residence until after December 31, 2021. e agency's statement highlighted its concern for a high volume of expiring forbearance plans this September and the risk that operational strains on servicers may expose homeowners to invalid foreclosure due to internal processing delays and errors. Regulatory pressure is not the only driving factor behind the need for increased protections for consumers. Housing insecurity continues to threaten Americans during this K-shaped recovery period that further divides the haves and have nots. As millions of homeowners adjust to making a mortgage payment for the first time in over a year, the problem will likely worsen. ere is no time (or patience) for operational inefficiencies that compound the problem. PREPARING FOR WHAT'S AHEAD Absent technology to automate the ingestion and processing of prescriptive offerings for borrowers exiting forbearance plans, servicers' communication channels will need to be staffed for the influx of customers that will have questions, confusion, and anxiety about the process. If servicers progress foreclosure actions based on systemic delinquency triggers while customers wait on hold to unwind such confusion, foreclosures will spike at the detriment of homeowners who relied on representations of their servicers that their forbearance would let them keep their homes. Taking a step back from the proposed rule and thinking conceptually about the expiration of a forbearance plan, the customer's expectation is for payment obligations to "reset" through either a modification, deferment, or other method to cure the delinquency. Servicers CONSUMER HARM & THE FORECLOSURE MORATORIA The need for streamlined, scalable processes to address a sudden influx of hardship requests is becoming increasingly urgent. Quick Take By: Carissa Robb

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