CFPB Rescinds Policy Statements on Temporary Flexibility During Pandemic
CFPB issues notice of proposed rulemaking- Mortgage Servicing Changes to prevent wave of COVID-19 foreclosures. On April 5, 2021, the CFPB proposed a set of rule changes intended to help prevent avoidable foreclosures as the emergency federal foreclosure protections expire. The CFPB’s proposal seeks to ensure that both servicers and borrowers have the tools and time they need to work together to prevent avoidable foreclosures, recognizing that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain.
“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.”
The CFPB’s proposed rule would:
Give borrowers time, until December 31, 2021 before many foreclosures would start
Give servicers options, allowing certain streamlined loan modification options based on an evaluation of an incomplete application
Keep borrowers informed of their options
Given the urgency of the crisis, the CFPB is requesting comments be submitted before May 11, 2021. Read a Fast Facts summary of the Notice of Proposed Rulemaking.
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