Published Article

CFPB Issues Report on Characteristics of Homeowners Who Remain in Forbearance as Pandemic Protections Expire

May 6, 2022

Almost eight million borrowers entered forbearance plans during the pandemic, including those plans available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Many borrowers have exited their forbearance plans. As a follow-up to its May 2021 report, the Consumer Financial Protection Bureau (CFPB) recently published an updated report on the characteristics of mortgage borrowers who remained under the protection of a forbearance plan as of January 2022 to help understand their demographics and financial capacity.

The CFPB’s findings include, among others:

• “The share of mortgages in forbearance fell significantly for minority and non-minority borrowers between March 2021 and January 2022. Decreases in the rate of forbearance were relatively larger for non-white than for white borrowers with the largest decreases occurring among Hispanic and other race borrowers.”
• “Black and Hispanic borrowers were overrepresented among those in forbearance. Black and Hispanic borrowers accounted for a combined 31.2 percent of forbearances, while only accounting for 18.2 percent of the overall sample of borrowers. Furthermore, Black borrowers were 2.8 times more likely and Hispanic borrowers were 1.6 times more likely to be in forbearance compared to white borrowers.”
• “Borrowers in forbearance as of January 2022 appear to have less financial capacity, on average, than borrowers in forbearance as of March 2021. Among mortgage borrowers who were pre-COVID delinquent, the rate of forbearance fell 46 percent between March 2021 and January 2022, whereas the rate of forbearance fell 74 percent over the same period for borrowers who were pre-COVID current.”
• “Mortgage borrowers with current (or mark-to-market) loan-to-value (LTV) ratios over 95 percent had significantly higher rates of forbearance compared to loans with lower LTV ratios in January 2022. However, this population of borrowers accounted for a small share of forbearances (1.0 percent).”

The borrowers identified in this report who still remain in forbearance should be monitored. Additionally, financial institutions should reach out to these persons through the end of forbearance to help them transition to performing loans.

Reprinted with permission from the American Bar Association’s Business Law Today May Month-In-Brief: Business Regulation & Regulated Industries.