CFPB Proposes Delaying Foreclosure Actions to 2022

Key Highlights

• Consumer Financial Protection Bureau CFPB) offers plan to delay impending foreclosure actions after December 31, 2021
• Currently 2.5M homeowners in forbearance plans

CFPB Proposal to Delay Foreclosure Action

The Consumer Financial Protection Bureau (CFPB) has just rolled out a series of proposed actions to help calm impending foreclosure processes set to expire in the coming months.

Rather, The CFPB sent out a notice for public input that would prohibit mortgage servicers from starting foreclosures until after December 31, 2021.   

Elements of CFPB’s Proposal

T CFPB is clearly worried about the 2.5M homeowners currently in forbearance plans.

In less than a week, the CFPB has sent out three notices about how to deal with forbearance borrowers three as the COVID pandemic tapers off.

Here are Proposed Guardrails in CFPB’s Latest Notice:

• More Time for Borrowers via a pre-foreclosure review period that would prevent mortgages servicers from beginning foreclosure actions until after December 31, 2021.
• Loan Modification Options for Borrowers from Mortgage Servers to pay back loans.This section proposes extending out the amortization (payback) time to 40 years.   This is an effort to make loan payments more affordable to forbearance borrowers.
• Increased Servicer to Borrower Communications to help ensure that forbearance borrowers get the information they need in a time frame in which they need it. In other words, more information in more languages communicated in more timely, scheduled intervals so borrowers know what they need to do and when they need to do it.

CFPB Also Wants Blanket Standard to Apply to ALL Loan

Right now, loan protections via the CARES Act only apply to federally backed or Freddie Mac and Fannie Mae mortgages.

The CFPB would like a blanket standard across the entire mortgage industry so that all homeowners with mortgages regardless of the mortgage servicer would be protected equally

Mortgages backed by Freddie and Fannie represent 70% of all home loans; the private mortgage sector makes up 30% of the mortgage market

Does Forbearance Program Need CFPB’s Extension Proposals?

As of the last week in March, the share of mortgage loans in forbearance dropped to 4.9%, according to the Mortgage Bankers Association (MBA).   This translates into 2.5M homeowners remaining in some form of forbearance as of March 28.

The MBA is, however, “hopeful” about the economy.  Mike Fratantoni, MBA’s senior vice president and chief economist, pointed to the Bureau of Labor Statistics’report that indicated nearly 1M jobs had been added to payrolls in March.

As the country races to vaccinate as many people as possible as soon as possible, hopefully no later than May, April’s job report could be as good as or better than March’s report.

It’s also worth noting that many of the people still unemployed and receiving federal disaster relief support/dollars are renters, not homeowners.

Public Comments to CFPB’s Proposal Are Welcomed Through Monday, May 10, 2021

The FHFA welcomes any and all public comments about these proposals. These public comments are due Monday, May 10, 2021.

Here is how you can submit your comments:

DATES: Comments must be received on or before May10,2021.
ADDRESSES: You may submit comments identified by DocketNo.CFPB-2021-0006, by any of the following methods:1

BILLING CODE: 4810-AM-P

• Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
• Email: 2021-NPRM-COVID-Mortgage-Servicing@cfpb.gov. Include Docket No. CFPB-2021-0006 in the subject line of the message.
• Hand Delivery/Mail/Courier: Comment Intake, Bureau of Consumer Financial Protection, 1700 G Street, NW, Washington, DC 20552. Please note that due to circumstances associated with the COVID-19 pandemic, the Bureau discourages the submission of comments by hand delivery, mail, or courier.

Instructions: The Bureau encourages the early submission of comments. All submissions should include the agency name and docket number for this rulemaking. Because paper mail in the Washington, DC area and at the Bureau is subject to delay, and in light of difficulties associated with mail and hand deliveries during the COVID-19 pandemic, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to https://www.regulations.gov.

Thanks to the Consumer Financial Protection Board,  dsnews.com and HousingWire.

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