This week, the CFPB issued a press release, CFPB Issues Rules to Facilitate Smooth Transition as Federal Foreclosure Protections Expire. The release contains a final rule and an executive summary. The CFPB’s
finalized amendments to the federal mortgage servicing regulations to reinforce the ongoing economic recovery as the federal foreclosure moratoria are phased out and which will help protect mortgage borrowers from unwelcome surprises as they exit forbearance. The amendments will support the housing market’s smooth and orderly transition to post-pandemic operation. The rules issued today will establish temporary special safeguards to help ensure that borrowers have time before foreclosure to explore their options, including loan modifications and selling their homes. The rules cover loans on principal residences, generally exclude small servicers, and will take effect on August 31, 2021.
The Bureau’s press release notes the “new rules will require servicers to redouble their efforts to work to prevent avoidable foreclosures,” what the CFPB calls a “smooth and orderly transition.” The rules will “[g]ive borrowers a meaningful opportunity to pursue loss mitigation options,” [a]llow mortgage servicers to help borrowers faster,” and it will “[t]ell borrowers their options.” The CFPB adds that
[w]ith these rule changes in place, homeowners exiting forbearance will have the time and support to make the decision that best fits their individual and family needs. Generally, borrowers will have at least three options to bring their mortgages current and avoid foreclosure. Borrowers may: [r]esume regular mortgage payments[, l]ower their monthly mortgage payments[ or s]ell their homes.
The CFPB noted that the new
rule changes are part of the CFPB’s strong partnership with the broader administration to help consumers and foster a smooth and equitable recovery in the housing market. Over the coming months, the CFPB will be working alongside other federal agencies to ensure an orderly transition to the post-pandemic housing market. The CFPB will significantly increase outreach to borrowers to share information about mortgage options, through direct contact as well as working with mortgage servicers and media.