The CFPB Empowers Homebuyers

By Nancy Wilberg Ricks, Senior Policy and Communications Strategist, Wealth-Building Policy Project, NCLR


Yesterday, the Consumer Financial Protection Bureau (CFPB) released new online tools to help consumers be better informed when purchasing a home. Whether you dream of buying a home years down the line or are in the midst of closing now, these tools can give you helpful information specific to your needs.

Richard Cordray, Director of the CFPB, discussed the new tool, housing trends, and market improvements at The Brookings Institute. In the live webcast (also below), he emphasized the need to change the market culture by empowering homebuyers with better information when purchasing their house—the largest asset that many will ever acquire. “When people take out a loan to buy a home, they deserve to have confidence that they are not being set up to fail,” said Cordray.

Full speech below:

These essential tools also come at the one-year anniversary of the CFPB’s mortgage servicing standards. In January 2014, the Bureau implemented new standards to improve deplorable customer service to homeowners, especially for those who need help saving their home from unnecessary foreclosures.

To closely follow compliance with these standards, NCLR and the National Housing Resource Center surveyed its housing counselors and synthesized the findings in a report last week. We were encouraged that the new rules improved the market for families, but we also see room for improvement. Read more here!

On the First Anniversary of New CFPB Rules, Are Mortgage Servicers Playing Fair?

Family in front of houseOne year ago, the Consumer Financial Protection Bureau (CFPB) introduced new rules to protect homeowners from incompetent customer service and abusive practices by mortgage servicers, the firms that manage mortgage payments. Partnering with the National Housing Resource Center, NCLR surveyed housing counselors across the country to find out if mortgage servicers were following these rules. Today, we’re releasing our findings in a report to show the progress made and provide recommendations for further improvement.

In the survey, we asked housing counselors to tell us how mortgage servicers had improved their communications with homeowners and housing counselors. Servicers were notorious for sending initial foreclosure notices but following with radio silence for months or even years, leaving families in limbo and feeling helpless. In addition, we asked about compliance with a new ban on “dual tracking,” a problem that has plagued the market and caused many unnecessary foreclosures. Dual tracking occurs when servicers push a family through foreclosure while simultaneously considering them for a loan modification that would otherwise help them keep their home.

CFPB_LogoWhile we found that the new CFPB rules are having an impact and compliance in some areas has vastly improved, housing counselors say mortgage servicers are flouting the rules with unacceptable frequency. Majorities of mortgage servicers did not comply with rules relating to servicers losing homeowner documents, missing deadlines for communicating with borrowers, and helping heirs upon the death of the borrower.

  • Nearly two-thirds (65 percent) of surveyed counselors said that servicers always or often lost documents or asked borrowers to submit the same documents multiple times.
  • Though servicers are required to make a decision on loan modification requests within 30 days, a majority (57 percent) of housing counselors said that servicers always or often failed to do this.
  • Despite servicers being required to have policies in place to identify and communicate with a successor after the death of a borrower, 63 percent of housing counselors said servicers rarely or never complied with this requirement.
  • Even with dual tracking banned, about one in five (19 percent) housing counselors said servicers occasionally, rarely, or never complied with this ban, putting homeowners at risk of wrongful foreclosure.
  • Though many homeowners were originally sold mortgages in non-English languages, the lack of language services for borrowers after they signed on the dotted line is a major problem. Nearly half (48 percent) of counselors said servicers rarely or never provided non-English written communication for borrowers with limited English proficiency.
  • Servicers are required to provide borrowers with access to one or several knowledgeable points of contact, but for borrowers with limited English proficiency this was often a challenge.
  • Forty-four percent of housing counselors said assigned points of contact were never or rarely fluent in the borrower’s preferred non-English language. When translators were provided, over half (55 percent) of counselors said the translators either never or rarely had a technical understanding of relevant issues and fluency in the target language.

In 2015 we look forward to seeing more progress among mortgage servicing practices. We are glad to see that the CFPB is stepping up enforcement against violators, and we encourage the agency to continue increasing enforcement efforts. We do urge the CFPB to address language access issues severely impacting the Latino community and engage housing counselors to better gauge what is and isn’t working in real time. Additionally, we encourage the CFPB to address the chronic problem of lost documents in a future rulemaking designed to stop this practice. They must also close a loophole in the rules that currently allows mortgage servicers to decide who does and does not receive legal protection by deeming whether a loan modification application is complete.

Read the entire report below:

Housing Survey Says Some Mortgage Servicers Still Don’t Follow the Rules

Family in front of houseThis January, new Consumer Financial Protection Bureau (CFPB) rules designed to protect homeowners from needless foreclosure and exploitative mortgage servicing practices went into effect. Partnering with the National Housing Resource Center and with help from the California Reinvestment Coalition, NCLR reached out to housing counselors and homeowners across the country to find out if mortgage servicers were following these rules.

In the survey, we asked respondents to tell us how mortgage servicers deal with homeowners and housing counselors. The new rules outlaw deceptive servicing practices that have historically plagued the mortgage sector, including “dual tracking,” in which servicers simultaneously begin the foreclosure process while borrowers are pursuing a loan modification.

While we’ve received many insightful and helpful responses, we need your help.

Can you take some time today to share your experiences with us?

Your responses and stories matter greatly to us and will be shared with the CFPB to help ensure that servicers are honoring all new borrower protections.

The results described below are preliminary and could change based on new responses:

  • In a preliminary reading of the ongoing survey, our data indicate that some servicers are failing to follow the rules. One common problem involved mortgage servicers repeatedly losing documents or asking borrowers to resubmit the same documents multiple times. Of 90 respondents who answered this question, over two in three said that servicers “always” or “often” lose documents or ask for resubmissions.
  • Although dual tracking is prohibited under the CFPB rules, respondents report that the practice is still occurring, with nearly 30 percent of 100 respondents answering that servicers only “occasionally” honor the dual tracking ban. Furthermore, one in seven say that servicers rarely or never honor the rule. This could spell huge problems for all homeowners affected.
  • Additionally, the rules require servicers to establish one or more staff who are knowledgeable about the borrower’s case and can be easily reached by phone. Our results indicate that this may be a continuing problem, with nearly three in 10 respondents claiming that servicers rarely or never comply with this rule.

CFPB_LogoWhile language access is not currently part of the CFPB rules, we also asked respondents about this topic, which is highly relevant for many Latino homebuyers and homeowners. Our preliminary data highlight a lack of language access for borrowers whose preferred language is other than English. Of 85 respondents, only about one in six said that servicers always or frequently provide documents in a borrower’s preferred language. This could indicate a wider language access problem in the servicing industry.

Though our survey does indicate that many servicers are complying with the new CFPB rules and interacting with borrowers appropriately, our preliminary results highlight that some servicers continue to practice deceptive servicing practices that hurt homeowners.

Our survey is ongoing and remains open, and we encourage homeowners and housing counselors to tell their stories about how mortgage servicers are honoring, or ignoring, the new CFPB rules.

We’ll share your stories with the CFPB and continue working to ensure that strong homeowner protections become a reality in the mortgage market.