Many borrowers still behind on mortgage payments after COVID-19 forbearance

More homeowners are at risk of foreclosure as they become delinquent on their loans after forbearance ends.

A new report from the Consumer Financial Protection Bureau (CFPB) revealed many owners are struggling to make their monthly mortgage payments after leaving forbearances related to COVID-19 difficulties.

The report was drawn from data from 16 major mortgage managers between May and December 2021, and found that homeowners continue to face significant risks and challenges when it comes to paying off their mortgages. Managers used for the service to collect data from many types of loans, including VA, FHA, GSE, PLS, or Wallet, in many locations across the United States to give the CFPB a better understanding of how managers cover all areas.

“While many mortgage managers are successfully helping borrowers avoid foreclosure, today’s report highlights that some mortgage managers are lagging behind their peers and less equipped to help borrowers who have left pandemic housing protections,” CFPB director Rohit Chopra said. “We will be closely monitoring the performance of mortgage officers to ensure they meet their obligations under the law.”

Homeowners are struggling to get back to restarting their monthly payments, according to the report. By the end of 2021, the mortgages of 330,000 borrowers were in default and no longer in forbearance. These owners had no loss mitigation in place.

If you’re struggling to make your monthly mortgage payment, you can potentially reduce it by lowering your interest rate with a mortgage refinance. Visit Credible to find your personalized interest rate without affecting your credit score.

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Homeowners struggle to work with mortgage services

A challenge many homeowners cited in the CFPB data was their inability to reach their mortgage agent’s call center or get a timely response.

“Mortgage Agent Call Centers are vital links between homeowner and agent that answer homeowners’ questions and provide them with information to make important decisions about their loans,” the CFPB said in its report. “The extent of these challenges varied significantly from one repairer to another.”

In April 2021, the CFPB mortgage agents warned to prepare for a wave of homeowners who need help, saying “unprepared is unacceptable”.

“There is a tidal wave of distressed homeowners who will need help from their mortgage departments in the months ahead,” CFPB acting director Dave Uejio said at the time. “Responsible repairers should prepare now. There is no time to waste and no excuse for inaction. No one should be surprised by what is to come.”

Call metrics showed average wait times of more than 10 minutes and call abandonment exceeded 30% for some mortgage services. Many metrics also indicated that borrowers are having difficulty getting direct contact over the phone to discuss their mortgage issues.

If you’re struggling to make your mortgage payments, consider refinancing to lower your monthly payments and even switch service providers. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.

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What to do if you’re having trouble with mortgage payments

CFPB data showed delinquency rates were higher for private student loans than for federal loans, which ranged between 25% and 39% depending on the manager. Default rates for federally guaranteed student loans ranged from 11% to 17%.

If you are having difficulty making your mortgage payments, you have several options. Here are a few:

1. Mortgage forbearance

Homeowners with federally guaranteed loans such as those backed by Fannie Mae, Freddie Mac, FHA, or other government agencies, may apply for a mortgage waiver. It allows homeowners to put their mortgage payments on hold for a specified period if they are having difficulty. After the forbearance period ends, homeowners will have the option to pay off missed payments in one lump sum, change monthly payments, or add missed payments to the end of the loan.

2. Modification of the loan

Borrowers whose financial situation has been permanently affected may consider a loan modification. They can contact their manager to discuss changing the terms of their loan, such as lowering their mortgage rate to lower their monthly payments. Borrowers will need to show proof of financial hardship to their servicer.

3. Mortgage refinancing

Borrowers — even those not facing financial hardship — can lower their monthly payments with a mortgage refinance, which could change the term of their loan or lower their interest rate. If you want to refinance your mortgage, contact Credible to speak to a mortgage expert and get all your questions answered.

Do you have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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