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The Consumer Financial Protection Bureau issued a new proposal for rule changes under the Real Estate Settlement Procedures Act, to help prevent an influx of COVID-19 foreclosures. The first suggestion involves postponing foreclosures until Dec. 31, 2021.
"The nation has endured more than a year of a deadly pandemic and a punishing economic crisis. We must not lose sight of the dangers so many consumers still face," said CFPB acting director Dave Uejio. "Millions of families are at risk of losing their homes to foreclosure in the coming months, even as the country opens back up. Last week we warned that servicers need to be prepared for a high volume of borrowers exiting forbearance, and today we are proposing additional guardrails and tools for servicers as they navigate the coming months. We will do everything in our power to ensure servicers work with struggling families to find solutions that prevent avoidable foreclosures."
With the proposed postponement of foreclosures, the CFPB believes borrowers will have enough time to explore options for making their payments. For example, the CFPB is considering whether to permit earlier foreclosures if the servicer has taken certain steps to evaluate the borrower for loss mitigation or made efforts to contact an unresponsive borrower. This provision, like the rest of the proposal, would only apply to loans secured by a borrower’s principal residence, according to a press release.
Additionally, the CFPB suggests giving servicers more options to help borrowers. The bureau's proposed rule would provide servicers with the ability to offer certain streamlined loan modifications options to borrowers facing COVID-19-related hardships based on the evaluation of an incomplete application, according to the report.
The CFPB is also stressing the need for servicer communications with borrowers to keep them informed on their options.
Click here to read the CFPB's proposed rule featuring protections for borrowers affected by COVID-19.