CFPB issues warning to mortgage servicers on Homeowner Assistance Fund

While strongly encouraging mortgage servicer participation in Homeowner Assistance Fund programs, a supervisory official at the Consumer Financial Protection Bureau has laid out specific responsibilities for those that do, and warned that related activity will be monitored closely.

The bureau’s heightened review of mortgage servicing will focus on "complaints about challenges working with servicers to use HAF funds,” Lorelei Salas, assistant director for supervision policy, said in a blog Monday.

“Servicers should review their existing policies and procedures to ensure that borrowers are not improperly referred to foreclosure, for example, especially while a servicer is working with a borrower during the HAF application process or waiting for payment of HAF funds,” said Salas.

Mortgage companies must ensure that information about Homeowner Assistance Fund programs, like all communication about the loss mitigation process, must be accurate, including whether or not the servicer participates and how borrowers should communicate with their housing finance companies throughout the process, she said.

“Servicers participating in HAF programs … are responsible for maintaining policies and procedures reasonably designed to ensure that they properly evaluate loss mitigation applications,” she said.

Mortgage companies should also provide training about the relief money available from the fund to customer-facing employees, Salas said.

Homeowner Assistance Fund programs had been rolled out in 27 states at the time of this writing, according to the National Council of State Housing Agencies. A dozen states had preliminary information available. Nine states had established pilot programs. Only two, Idaho and Utah, had not yet released information about their programs.

All the programs to date allow Homeowner Assistance Fund money to be used for mortgage relief within certain parameters set at the state level. In some states it can also be used for purposes like utility payments. Payment of delinquent property taxes also are often allowed. Servicers appear to be broadly participating. Tennessee’s program, for example, lists 47 that do.

Although Homeowner Assistance Fund programs have yet to launch in some states, money has already run out and applicants have been waitlisted in New York, the state Black Knight estimated early on would have the biggest gap between consumer needs and allocated funds. HAF monies were expected to cover just 9% of the pandemic-related increase in delinquencies in the state, but potentially be supplemented by reallocation from other jurisdictions.

The states where Homeowner Assistance Fund programs have gotten underway at deadline were: Alabama, Alaska, Arizona, Arkansas, California, Florida, Georgia, Hawaii, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Virginia and Wisconsin. Guam and Puerto Rico, which are U.S. territories, also have programs. Some HAF assistance also may be available on tribal lands.

Preliminary information has been released for HAF programs in the following states: Delaware, Illinois, Indiana, Iowa, Kansas, Maine, Minnesota, New Hampshire, North Dakota, Oregon, South Dakota, and Wyoming. Pilot programs have been launched in Colorado, Connecticut, Mississippi, Montana, Nevada, Ohio, South Carolina, Washington, West Virginia, and Washington, D.C.