The report highlights payment assistance shown on consumers’ credit records.
Consumers’ need for payment assistance on loans appears to be improving, according to new research from the Consumer Financial Protection Bureau, which focuses on assistance reported on consumers’ credit records, according to a blog post by the CFPB.
The CFPB defines “consumer assistance as an account being reported with zero scheduled payment due despite a positive balance. In [an] August 2020 report, we found that most credit products saw a sharp uptick in assistance in March 2020 and an uptick in transitions out of assistance between April and June,” according to the blog post. “Since July 2020, consumers have transitioned out of assistance to varying degrees across all credit products, but a significant share of mortgage borrowers continue to receive assistance.”
The August 2020 report also showed that consumers have not experienced significant increases in delinquency or other negative credit outcomes during the COVID-19 pandemic, ACA International previously reported.
The report on payment assistance is the second in a CFPB research series documenting trends in consumer credit outcomes during the COVID-19 pandemic. The CFPB focused on month-to-month transitions in assistance, “meaning loans that were reported with scheduled payment due in one month and no scheduled payment due in the next month despite a positive balance,” according to the blog post.
Throughout the pandemic, debt collectors have helped consumers manage their payments, provide resources on hardship programs and suggest solutions that fit with their financial situation. Calls from consumers to the agencies were on the rise during the pandemic. Consumers sought help managing their finances and exploring hardship options as a result of the ongoing COVID-19 pandemic.
Key findings from the report, based on the bureau’s Consumer Credit Panel, a deidentified sample of records from one of the three nationwide consumer reporting agencies, include:
- Except student loans, the total share of loans with payment assistance started declining in the summer of 2020, as the initial increase in loans transitioning into assistance abated and accounts began transitioning out of assistance in larger numbers.
- There continued to be high rates of assistance in student loans largely due to the CARES Act, which put most student loans in automatic payment suspension.
- By March of 2021, the total share of auto loans and credit card accounts with assistance was only slightly above pre-pandemic levels, while the share of mortgages and student loans on assistance remains significantly higher than pre-pandemic baselines.
- 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 payment assistance. Meanwhile, consumers with higher credit scores and higher balances were both more likely to exit assistance when holding other factors constant, reflecting the likelihood that these consumers are well-off and consequently less affected by the COVID-19 income shocks.
Given the ongoing need for mortgage assistance, the CFPB recently finalized a rule on temporary safeguards for consumers when federal foreclosure protections expire.
Read the CFPB’s research on payment assistance here. Its next report in the series will focus on trends in consumers’ use of credit cards during the pandemic.
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