CFPB Says Mortgage Servicers Burden Borrowers After Deaths, Divorce – The Mortgage Note

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Mortgage servicers push homeowners to take on debt or burden them with needless paperwork requests after divorce or the death of an original borrower, according to the Consumer Financial Protection Bureau.

Federal rules require mortgage servicers to help homeowners learn how to make payments and evaluate the possibility of a loan modification. But a new report says homeowners are reporting that servicers tell them they must refinance the loan at higher rates even though they’re allowed to maintain the existing loan terms.

Servicers have also been reported to delay processing paperwork for “months or even years,” fail to respond to inquiries, or refuse to release the original borrower from liability.

“When someone loses a spouse or goes through a divorce, the last thing they need is their mortgage servicer giving them the runaround or pushing them into an unaffordable loan. Mortgage servicers have clear obligations under federal law to help these homeowners,” said CFPB Director Rohit Chopra.

The report further suggests that domestic violence survivors deal with additional challenges, such as servicers continuing to send mortgage information to their abusers or requiring the abuser’s consent for changes.

“Servicers generally blame investor requirements, processing volumes, or ‘systems issues,’ rather than taking responsibility for their shoddy customer service,” the report reads.

These issues are especially harmful to military service members and their spouses.

“Assumptions are a fundamental feature of a VA-guaranteed loan, and when a Veteran passes away, their qualified surviving spouse should be able to assume the loan without further delay,” said Joshua Jacobs, Under Secretary for Benefits at the Department of Veterans Affairs.

“It’s unacceptable that anyone would target surviving spouses in their time of need. VA has published guidance to remind holders and servicers of assumption guidelines — and we’ve outlined how VA will address any failure to comply with these requirements.”