PUB. 11 2021-2022 Issue 2

coloradobankers.org 14 Mortgage Borrowers Amid the COVID-19 Pandemic 2021 and Onward A t the beginning of the year, Acting Director Dave Ujieo of the Consumer Financial Protection Bureau (CFPB) stated the agency would shift its focus to a more assertive role regarding enforcing regulations protecting consumers. Because of this shift, one of the chief enforcement priorities would be to emphasize protection and compliance with regulations for borrowers impacted by the COVID-19 pandemic. In addition, now that we are in the middle of 2021, the CFPB has published a report analyzing data on mortgage borrowers most affected by the pandemic and proposed a collection of rules extending protections at least until the middle of next year. Because of these publications, banks should prepare for a more significant regulatory emphasis on COVID-19 protections and fair lending practices. According to the CFPB’s Special Issue brief titled Characteristics of Mortgage Borrowers, released May of this year, the COVID-19 pandemic’s financial impact on banks and mortgage customers has not been this vast and deep since the Great Recession of 2010. Because of the pandemic’s economic reach, we have seen an increase in the availability of forbearance programs that temporarily allow borrowers to stop making payments even when delinquent. The CFPB analyzed the data and discovered that Black and Hispanic borrowers make up a significant percentage of all mortgage borrowers at 18%. However, this same group of borrowers makes up an even more substantial percentage of forbearance at 33% or delinquent at 27%. The CFPB also found that loans with a loan-to-value (LTV) ratio above 60% were more common for borrowers in forbearance or delinquent than those current with their mortgages. Additionally, the CFPB established those with an LTV ratio above 95% were most susceptible to defaulting on their mortgage. The data shows that loans in forbearance or delinquent were more likely to be single-borrower loans with a sizable amount being delinquent for at least 30 to 60 days. In crystallizing By Tim Dominguez Compliance Alliance