CFPB Analyzes Trends in Reported Assistance on Consumers’ Credit Records

The CFPB recently posted its second analysis in a series documenting trends in consumer credit outcomes during the COVID-19 pandemic.  The analysis focuses on reported assistance on consumers’ credit records by reviewing month-to-month transitions in assistance—that is, loans that were reported with scheduled payment due in one month and no scheduled payment due in the next month despite a positive balance.

Since July 2020, consumers have transitioned out of assistance across all credit products, including mortgage borrowers.  In the summer of 2020, the total share of mortgage borrowers (along with auto loan and credit card borrowers) with payment assistance began to decrease.  Although the total share of auto loans and credit card accounts on assistance in March 2021 was only slightly above pre-pandemic baselines, the share of mortgage (and student) loans with assistance remains significantly higher than pre-pandemic levels.

In its August 2020 report on early trends in consumer credit outcomes through June 2020, the CFPB found that majority Black census tracts, majority Hispanic census tracts, older borrowers and borrowers in counties hit hardest by COVID cases and layoffs were most likely to receive assistance in the early months of the pandemic.  However, this trend is not reflective in those exiting assistance.  Whereas consumers in majority Hispanic census tracts were more likely to exit assistance, consumers in majority Black census tracts were somewhat less likely to exit assistance than their counterparts in majority white census tracts.  Similarly, mortgage borrowers in non-metro area census tracts, in counties with higher numbers of COVID-19 cases, and with higher unemployment rates were less likely to exit assistance.  Rather, consumers with higher credit scores and higher balances were both more likely to exit assistance.

The CFPB warns that the risk of reported delinquencies and foreclosures may rise as the assistance from programs such as the Federal CARES Act ends.  To transition out of this period of widespread payment assistance, the CFPB finalized a rule, effective August 31, 2021, establishing temporary safeguards to help ensure that borrowers have time before foreclosure to explore their options, including loan modifications and selling their homes.