Business & Investment

CFPB moves to avoid foreclosure waves

Consumer Financial Protection Bureau strengthens protection against struggling mortgage borrowers, including non-federal-backed loan borrowers that have previously been excluded from national COVID-related bailouts It’s working to do.

Suggested rule changes CFPB announces Monday usually blocks servicers from initiating foreclosures until the end of the year, allowing servicers to offer certain streamlined load-correction options to borrowers with pandemic-related difficulties, allowing borrowers to tolerate and reduce losses. Make sure you get timely information about.

The proposed changes “ensure tools and time for servicers and borrowers to work together to prevent life-threatening, uprooting children and avoidable foreclosures that cost more to those who cannot tolerate them. “CFPB’s deputy director, Dave Wesio, said on the phone. With a reporter on Monday.

Nearly 3 million homeowners are lagging behind in mortgage payments, according to the CFPB. As of February, serious mortgage arrears (more than 90 days arrears) were five times higher than pre-pandemic levels, according to mortgage data provider Black Knight.

Read again: How to Determine If You Are Eligible for Pandemic Mortgage Remedies

Once finalized, changes to the rules could be particularly important for approximately 14.5 million single-family mortgages that are not backed by Fannie Mae.
+ 1.96%

Or Freddie Mac
+ 0.50%

Or by the federal government. Homeowners with federal-backed mortgages are eligible for up to 18 months of COVID-related foreclosures and are currently protected from foreclosures until June 30th, but the loan is private and federal. Homeowners without government support are not guaranteed such relief.

Some servicers say they’re trying to offer the same bailout option to all borrowers, whether or not the loan is federally backed, but MarketWatch Report last month Some homeowners with privately owned loans have received little or no relief during the pandemic and are facing foreclosures.

One of the reasons the CFPB took action was that coronavirus aid, relief and economic security (CARES) law protection was only applied to federally backed loans, but about 30% of loans It is private, said Diane Thompson, senior adviser to the CFPB. Press conference on Monday. She said the proposed rules would generally apply to the entire mortgage market.

Monday’s announcement said last week’s CFPB that mortgage servicers need to prepare for a “tsunami” of suffering homeowners who need help when federal emergency mortgage protection expires later this year. Followed by the warning. Approximately 1.7 million homeowners will be tolerant in September and the following month, and servicers will need to have enough staff and resources to help them, the agency said.

To prevent these borrowers from entering the foreclosure, the CFPB’s proposal generally includes a “special pre-foreclosure review period” that prohibits servicers from initiating foreclosures until after December 31, 2021. I will. On that day, consider whether to allow early foreclosure if the servicer considers loss mitigation options or takes certain steps to communicate with the unresponsive borrower.

CFPB moves to avoid foreclosure waves CFPB moves to avoid foreclosure waves

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