Homeowners behind on mortgages will be offered help, US agency says
Millions of homeowners behind on their mortgage payments would benefit from additional foreclosure protections until the end of 2021 under a set of rules completed Monday by the Consumer Financial Protection Bureau.
Under the rules, mortgage lenders typically can’t foreclose on a home without first contacting the homeowners to see if they qualify for a lower interest rate or another loan change that makes repayment easier.
“We want maintenance workers and homeowners to be actively involved in loss mitigation throughout the summer and fall so that we can get as many people as possible to a good result,” said Diane Thompson, senior advisor to the agency’s acting director. a call with journalists.
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If a change is not possible or if a landlord does not respond, or if the property is unoccupied, foreclosure may occur after the rules come into force on August 31.
The purpose of the rules, agency officials said, is to ensure that mortgage companies thoroughly deal with the large number of borrowers who are expected to exit temporary pandemic programs that have allowed homeowners to postpone. monthly payments until fall. CFPB officials say they want to prevent any preventable seizure.
An existing foreclosure moratorium for borrowers with federally guaranteed mortgages currently expires on July 31.
A draft of the rules could have effectively barred any foreclosure until 2022. Agency officials said the proposal could have discouraged some mortgage services from helping borrowers this year.
âAs the country shifts from the Covid-19 emergency to economic recovery, we cannot be content with the dangers we still face,â said Dave Uejio, acting director of CFPB.
Consumer groups praised Monday’s rules. Melissa Stegman, senior policy advisor at the Center for Responsible Lending, said the regulation “equips homeowners with key protections and helps prevent unnecessary foreclosures.”
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About seven million homeowners took advantage of the so-called forbearance period, according to industry estimates, and many borrowers will simply have their missed payments added up at the end of their loans. Borrowers who subscribe to such plans may skip payments if they experience difficulties from the pandemic, but must catch up later.
As of June 22, some 2.06 million borrowers were still on a forbearance program, mortgage data firm Black Knight Inc. reported Monday. Of these, about 575,000 borrowers are on plans that are expected to expire in September and October, according to Black Knight, posing a challenge for the mortgage companies that handle the loans.