The Consumer Financial Protection Bureau this week proposed a set of rule changes intended to prevent foreclosures as emergency federal foreclosure protections expire this summer. The changes include language prohibiting servicers from making the first notice or filing required to initiate a foreclosure until after Dec. 31.
"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 agency said in as statement.
The changes cover three main areas:
- Giving borrowers time: Providing a new pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after Dec. 31.
- Giving servicers options: Permitting servicers to offer streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application. This provision would only be available for modifications that do not increase a borrower’s monthly payment or extend the loan’s term by no more than 40 years from the modification’s effective date.
- Keeping borrowers informed: The proposed rules provide temporary changes to certain required servicer communications.
The CFPB is requesting comments be submitted before May 11. Find out more here.