The CFPB today issued a request for information asking for input on ways to improve mortgage refinances for homeowners who would benefit from refinancing, especially for borrowers with smaller loan balances. The agency also wants feedback on ways to support automatic short-term and long-term loss mitigation assistance for homeowners who experience financial disruptions.
The CFPB plans to use the information as it considers steps to support household financial stability and address refinance market gaps. Mortgage refinancing can be harder to access for borrowers with smaller loan balances, according to the CFPB, which also noted that Black and Hispanic borrowers, who on average have smaller loans, have not participated in recent refinance booms at the same rate as white borrowers.
Refinancing volume is down almost 70% from last year as interest rates have risen. New streamlined and automatic refinancing mortgage products could make sure that those who are buying a home now or refinancing to cover other needs are able to benefit from the next interest rate drop, the CFPB said. The agency is interested in the features of pandemic-related forbearance programs that might be made more generally available to borrowers.
The CFPB is requesting information on multiple elements, including: targeted and streamlined refinance programs that have been used to improve refinancing, typically with lower transaction costs than traditional refinances; innovative refinancing products, such as one-way adjustable rate mortgages or loans that feature automatic refinancing, that might automatically trigger an offer to refinance or automatically reduce a loan’s interest rate in certain circumstances; and automatic forbearance and long-term loss mitigation assistance, which could help ensure that homeowners whose incomes or financial situations are affected by events such as natural disasters are able to receive timely payment relief that could help them avoid foreclosure and provide increased household financial stability.