Today, the Consumer Financial Protection Bureau announced a proposed rulemaking that would prohibit servicers from commencing foreclosure actions until after December 31, 2021.
Under the current rules, a borrower must be 120 days delinquent before a loan servicer can start the foreclosure process. But almost 2.1 million households are currently in forbearance past the 90-day delinquent mark, and the CFPB is concerned those borrowers would be thrown into the foreclosure process immediately upon expiration of the current forbearance period.
To prevent a mass wave of foreclosures, the CFPB’s proposed rule would allow loan servicers to offer certain streamlined loan modification options to borrowers with COVID-related hardships. Additional guidelines will be aimed at requiring server communications to ensure borrowers receive key information about their options.
And, while many protections of the CARES Act only apply to federally backed mortgages, the CFPB is seeking to set a blanket standard across the industry so all homeowners would have similar protections regardless of the owner or servicer of the loan.