Millions of homeowners who are struggling to make their mortgage payments due to the coronavirus pandemic could get a fresh reprieve under new rules that a U.S. consumer watchdog plans to adopt this summer.
The Consumer Financial Protection Bureau (CFPB) will finalize a rule first proposed in April that would essentially prevent mortgage servicers from starting foreclosure proceedings until after Dec. 31, 2021, according to Reuters, citing sources familiar with the matter.
“The CFPB is working on finalizing the proposal,” a spokesperson told FOX Business. “We remain committed to working with both servicers and homeowners to prevent avoidable foreclosures to the maximum extent possible. The economic recovery risks leaving some communities behind, and no one should lose their home without a chance to explore their options.”
The CFPB plans to finalize the rule and make it effective before the end of August, Reuters reported, and has agreed to carve out certain groups of borrowers after the industry said the proposal was too broad and beyond the bureau’s legal limit. Individuals who may be excluded from the new protections include borrowers in the process of negotiating an arrangement with their servicer to avoid foreclosure but who have not yet applied to be put into forbearance.
Borrowers who may have abandoned their homes – without trying to notify their servicers – as well as those who do not respond to multiple inquiries from servicers about whether they wish to remain in their homes may also be excluded.
The exclusions are designed to limit the compliance burden for some servicers and give them more flexibility to help customers, according to Reuters. Read more…