CFPB develops proposal to avoid large-scale foreclosures

The Consumer Financial Protection Bureau (CFPB) has developed a proposal to prevent avoidable foreclosures, as the temporary forbearance measures put in place during the pandemic will expire in the fall.

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The CFPB’s proposal aims to ensure that mortgage agents and borrowers can work together to prevent avoidable foreclosures.

“The nation has endured more than a year of a deadly pandemic and a punitive economic crisis. We must not lose sight of the dangers that many consumers still face, ”said Dave Uejio, Acting Director of CFPB. “Millions of families risk losing their homes to foreclosure in the coming months, even as the country reopens. Last week we warned that maintenance services need to be prepared for a high volume of borrowers coming out of forbearance, and today we are offering additional safeguards and tools for maintenance services as ‘they are sailing in the coming months. We will do everything in our power to ensure that duty officers work with struggling families to find solutions that prevent preventable foreclosures. “

Specifically, the proposed rule would provide for a special pre-foreclosure review period that would generally prohibit service providers from starting the foreclosure until after December 31, 2021. In addition, it would allow service providers to offer certain options for loan modification simplified for borrowers with COVID-19. difficulties related to the evaluation of an incomplete application. In addition, the CFPB is proposing temporary changes to some required communications with departments to ensure borrowers receive key information about their options.

In February, about 3 million homeowners were behind on their mortgages. Of that total, about 2.1 million mortgages were forborne and overdue for at least 90 days. If current trends continue, there could be 1.7 million overdue loans in September 2021. Additionally, black and Hispanic homeowners were more than twice as likely to be behind on housing payments in December. 2020, according to the CFPB.

The CFPB has warned mortgage agents to devote resources and staff to prepare for an increase in requests for assistance. The CFPB will monitor how providers engage with borrowers, respond to borrower requests, and process requests.

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