CFPB Warns Mortgage Servicers to Start Complying with CARES Act Protections

On June 19, 2020, the Consumer Financial Protection Bureau (”CFPB”) put mortgage servicers  on notice, urging them to comply with credit reporting obligations amid record numbers of consumer complaints.  The CFPB saw its highest-ever complaint volumes in April and May 2020, due to COVID-19-related complaints.  Complaints about mortgages were most common among the COVID-19-related complaints.

The CARES Act proactively sought to address mortgage payment issues, allowing struggling homeowners with federally backed mortgages to receive up to 360 days of forbearance.  However, servicers are typically only allowing 90 days forbearance, although they are also promising potential additional forbearance periods once the first forbearance period ends.

Homeowners should apply for more advantageous relief plans while in the initial forbearance period.  Please see Treinen Law Office’s related blog – If You Are Having Trouble Obtaining Adequate Relief from Your Mortgage Servicer – that provides further information.

The CFPB has instructed servicers to comply with the CARES Act by continuing to report consumers as current on their loans even if they’ve received pandemic-related relief.  CFPB Director Kathy Kraninger stated that servicers “remain responsible for conducting reasonable investigations of consumer disputes in a timely fashion.”

Homeowners should monitor their credit reports once they are in a forbearance plan or other COVID-19 relief plan.  If the reporting is inaccurate – for example, the servicer is reporting payments as late even though the homeowner was current when the forbearance period began – homeowners should dispute.  Disputes are best done in writing by certified mail, return receipt requested.

Disputing is very important.  Homeowners may need to obtain credit before COVID-19 disruptions end.  Even if this is not true, homeowners should do all they can to preserve their credit ratings during the downturn.  The reporting of late payments, left unchecked, may turn into a default or foreclosure on the homeowner’s credit report.  Under the law, the credit reporting agencies – Equifax, Experian and Trans Union – have an independent duty to perform their own reasonable investigation regarding anything reported on their credit reports.

Please see Treinen Law Office’s related blog – Protecting Your Family Financially in COVID-19 Times – that provides further information about how to lodge effective disputes.

Even before COVID-19, Treinen Law Office helped consumers with dispute letters free of charge.  We are happy to continue to do so.  We also can help you obtain and monitor your credit reports.  Please feel free to call.  We are doing what we can to help.

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