On December 17, 2024, the CFPB issued a report on the experiences of homeowners dealing with their mortgage company after divorce or the death of an original borrower. Federal rules require servicers to assist successor homeowners with managing or assuming existing mortgages, but complaints reveal significant delays and pressure to refinance at higher rates instead of supporting loan retention.
Based on its review of consumer complaints, the CFPB has identified multiple areas of concern, including:
Pressure to take out higher-interest loans. Homeowners report servicers telling them they must refinance their mortgages at today's higher interest rates even though federal mortgage guidelines allow them to maintain the existing loan terms.
Repeated delays and paperwork requests. Many homeowners report waiting months or even years for servicers to process their paperwork, with some reporting that servicers repeatedly request the same documentation or fail to respond to inquiries.
Refusals to release the original borrower from liability. Some homeowners report that servicers are denying their requests to remove the original borrower from the mortgage, even when the successor homeowner has been making all payments on the mortgage for years.
Risks to domestic violence survivors. Survivors of domestic violence have reported that servicers continue sending account information to their abusers and require their abusers' consent for account changes, potentially creating safety threats.
The CFPB urges investors and guarantors to review servicers' policies for legal compliance, ensure they aren't pressuring successor homeowners to refinance, assess if underwriting requirements hinder mortgage assumptions, and collaborate with servicers to protect successor homeowners, especially survivors of domestic violence.
Read the CFPB’s press release here.
The Issue Spotlight can be found here.