The CFPB issued its final rule seeking to prevent avoidable foreclosures through the end of 2021 by assisting mortgage borrowers affected by the COVID-19 emergency. This statement occurred after announcing that the federal foreclosure moratorium (in place since March 2020) will likely expire soon. On June 28, 2021, the rules issued
will establish temporary special safeguards to help ensure that borrowers have time before foreclosure to explore their options, including loan modifications and selling their homes. The rules cover loans on principal residences, generally exclude small servicers, and will take effect on August 31, 2021.
To help borrowers facing foreclosure as a result of the pandemic, the CFPB is requiring:
- Lenders to facilitate loss mitigation before initiating foreclosures for certain mortgages through the end of the year
- Lenders to offer streamlined loan modifications (for certain mortgages) to borrowers with COVID-19-related hardships
- Lenders to increase their outreach to borrowers before initiating foreclosure
In recognition that not all foreclosures are avoidable, the CFPB’s new rules will allow foreclosures to commence if the borrower:
- Has abandoned the property;
- Was more than 120 days behind on their mortgage before March 1, 2020;
- Is more than 120 days behind on their mortgage payments and has not responded to specifically required outreach from the mortgage servicer for 90 days; or
- Has been evaluated for all options other than foreclosure, and there are no available options to avoid foreclosure
At Weltman, we are here to ensure that our clients stay in compliance with the CFPB Rule by offering to assist with borrower outreach and loss mitigation, and assist in proceeding with foreclosure where unavoidable. If you have questions on how we can help your mortgage default needs, please contact Ben Hoen
For more comprehensive information and insights, watch our Foreclosures & Loss Mitigation
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.