Housing Insecurity and the COVID-19 Pandemic

  • Source: files.consumerfinance.gov

Treliant Takeaway:

Treliant’s Corporate & Regulatory Compliance practice stands ready to assist you as you navigate ever-changing regulations and resulting consumer lending requirements.  From transaction level through transformation, Treliant’s well-seasoned professionals can help.  As mortgage servicing-related regulatory enforcement continues to expand, now is the time to document and test to ensure that your actions and outcomes are compliant as it relates to loss mitigation, forbearance, and foreclosure.

Report Highlights:

On March 1, 2021 the Consumer Financial Protection Bureau (CFPB) issued a report about the impact of the COVID-19 pandemic on housing insecurity. The report’s executive summary states that “this report summarizes some of the relevant data and research on the impact of the pandemic on the rental and mortgage market, and particularly its impact on low income and minority households.” Considering that this report was issued during the beginning of the new administration in Washington, and followed-up the CFPB’s most recent supervisory highlights highlighting mortgage servicing issues, it is reasonable to believe that the information in the report, as it relates to mortgage servicing, will be at the front lines of policy making and regulatory enforcement for the CFPB.

The report outlines the impacts of the pandemic related to housing, as well as the disparities between different racial and socioeconomic groups, stating that “Communities of color have disproportionately suffered the health and economic impacts of the COVID-19 pandemic, including increased levels of housing insecurity.” It also contains data related to housing insecurity that can be considered particularly troubling, especially as it pertains to the ability of mortgage borrowers to repay their loans, as well as renters’ ability to pay their monthly housing expense.

The data in the report is similar to trends seen during the last historical trends seen during the most recent financial crisis that began in 2008, and suggests that housing insecurity facing homeowners and renters is on an upward trajectory. The most recent relief delivered from Washington as related to housing has been helpful for consumers by way of foreclosure and eviction moratoria, however these relief measures will not continue indefinitely. Once these measures lapse, the CFPB will be focused on how servicers handle their borrowers coming out of forbearance, whether it be to a permanent loan modification, or another result of the loss mitigation process, potentially foreclosure. Treliant can assist servicers in reviewing their loss mitigation policies and procedures to assess compliance with the requirements in Regulation X and also to determine whether these policies and procedures are being applied equally to all consumers, mitigating any fair servicing risk that might arise.