AZ Forbearance Update 2/4/2021

In this 17 minute video, Lydia Wietsma and I discuss the latest in forbearance and updates on the new CFPB leadership.

We do these videos to share the information with real estate professionals and struggling borrowers. People have options. There is no need to panic sell.

Forbearance Numbers:

This week the percentage of borrowers in forbearance remained flat at 5.38% or roughly 2.7 million borrowers. This number has remained unchanged for nearly 3 months.

Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “While new forbearance requests dropped slightly, the rate of exits from forbearance was at the slowest pace since MBA began tracking exit data last summer.”  

“Overall, the forbearance numbers have been little changed over the past few months. Homeowners still in forbearance are likely facing ongoing challenges with lost jobs, lost income, and other impacts from the pandemic.”

With improvement rates and exits slowing, data analytics company Black Knight estimates there are only 860,000 forbearance plan expirations scheduled for January and February. That’s less than the industry saw in December alone, which Black Knight said could limit potential removal activity over the next 60 days.

Forbearance by Stage:

• The initial stage decreased slightly to 18.07% (versus 18.17% the previous week)
• Extensions remained about the same at 79.30% (versus 79.31% the previous week)
• Reentries increased slightly from 2.52% to 2.64%.

Forbearance Exits from June 1, 2020 – January 24, 2021:

44.2% of borrowers are current upon exiting their plan. Down from 44.4% the previous week.

13.4% of borrowers exited forbearance with no loss mitigation plan in place. These are the borrowers who need help.

This means that if all 2.7 million borrowers exited their forbearance plan today, about 362,000 would leave with no plan in place.

New CFPB Leadership:

The Biden administration appointed Dave Uejio as the new acting director of the Consumer Financial Protection Bureau (CFPB). Expect strict enforcement coming down from the CFPB under this administration, much like how it was under the Obama administration. The power of the CFPB was diminished under the Trump administration.

Uejio said that the bureau will direct its attention to mortgage servicers, promising “aggressive action” to ensure companies follow the law. He went on to explain that in the coming months, his top two priorities are relief for consumers facing hardship due to COVID-19 and the related economic crisis and racial equity.

“One thing we can do immediately is focus our supervision and enforcement tools on overseeing the companies responsible for COVID relief,” Uejio said in the email. “I am concerned about the findings described in last week’s Supervisory Highlights edition that companies are failing to properly administer relief through the crisis.” Here are some of the issues the acting director highlighted on servicers:

• Mortgage servicers gave consumers incomplete and inaccurate information about CARES Act forbearances, failed to process forbearance requests and collected and assessed late fees despite having approved forbearances.
• Servicers withdrew money even though consumers were in deferment.
• Companies across markets misreported accounts to credit bureaus and violated CARES Act amendments that added protections to the Fair Credit Reporting Act.

Uejio also stated that they will be expediting enforcement investigations relating to COVID-19 in order to send a message to the industry at large.

“On COVID-19, we need to take swift action now, in order to make sure our actions help people in the middle of the crisis, rather than just cleaning up after the fact,” he said. “As you know, protecting economically vulnerable consumers is core to the mission of the CFPB and a key reason why the agency was created. It is going to take urgent action for the CFPB to step up to this challenge.”

Home Valuation:

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