The Consumer Financial Protection Bureau is considering new rules to avoid a wave of foreclosures later this year, when millions of homeowners are no longer allowed to defer mortgage payments.
Last year, the federal government suspended foreclosures and evictions for mortgages insured by the Federal Housing Administration as the coronavirus pandemic left millions unemployed. Fannie Mae and Freddie Mac did the same for borrowers in single-family homes with loans secured by the two mortgage buyers. The initiatives provided borrowers with relief of up to one year and suspended late fees and penalties.
In February, nearly 3 million U.S. homeowners were behind on their home loans, with about 2.1 million mortgages in forbearance and at least 90 days overdue, according to the CFPB. If current trends continue, there could still be 1.7 million such loans by September, the CFPB said.
A rule proposed by the agency would prohibit mortgage managers from starting the foreclosure process before December 31. The CFPB is also considering allowing managers to initiate foreclosures before the end of this year, in some cases, for example if they have made efforts to contact a borrower who does not respond.
The CFPB is also evaluating a rule that would allow managers to offer “certain simplified loan modification options” to borrowers facing difficulties caused by the pandemic, and changes to ensure that managers notify borrowers of their options by timely. The agency is seeking public comments on its proposed rule changes until May 11.