The CARES Act
Proposed Mortgage Changes to Protect Homeowners in Forbearance
With nearly 1.7 million homeowners expected to exit forbearance in the coming months, in April 2021, the Consumer Financial Protection Bureau (CFPB) proposed some changes to help avoid a rash of COVID-19 foreclosures. Many of these homeowners are a year or more behind on their house payments. If these changes are adopted, foreclosures could be banned until 2022. The rule, which the CFPB says would benefit both underwater homeowners and mortgage providers, would prevent mortgage servicers from beginning the foreclosure process until after December 31, 2021.
- Giving borrowers time to figure out ways to resume making payments so they can avoid foreclosure on their principal residence. With an unprecedented number of borrowers set to exit forbearance at the same time this fall, the proposal also suggests a special pre-foreclosure review to evaluate the borrower’s situation.
- Offering options to loan servicers for modifications to those borrowers who are experiencing COVID-19 related hardships. Providing this kind of flexibility would enable lenders to get borrowers who are behind with little chance of catching up into a more affordable mortgage situation.
- Keeping borrowers informed of their options so they are not caught unaware and have the information they need to avoid losing their homes.
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