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Kelly Anne Smith reports on the latest efforts by the federal government to the stem an expected flood of foreclosures as pandemic mortgage protections expire later this year.
"A new rule proposal from the Consumer Financial Protection Bureau (CFPB), a federal agency tasked with protecting consumers by enforcing federal consumer financial laws, would create a new pre-eviction review period to grant millions of Americans more time to figure out payment options before Covid-19 federal mortgage protections expire at the end of June," reports Smith.
In February, the Biden administration worked with the U.S. Department of Housing and Urban Development, the Department of Veterans Affairs, and the Department of Agriculture to extend existing foreclosure moratoriums for federally backed mortgage loans, including FHA-insured, VA-guaranteed, and USDA loans, through at least June 30, 2021, according to a separate article by Amy Loftsgordon. Smith notes despite those protections, millions of evictions have occurred through the pandemic despite protections from the centers for Disease Control. Foreclosure sales have also persisted despite federal, state, and local protections.
With uncertainty risking the financial security of both renters and landlords, the CFPB is working to add new protections as the threat of a large wave of evictions continues to loom. The CFPB cited data "estimating nearly 1.7 million borrowers will exit forbearance programs, where a lender allows borrowers to stop making payments for a period of time, in September and the following months," according to Smith. Nearly 2.1 million homeowners in forbearance are already past the 90-day delinquency period, according to CFPB data cited by Smith.
As for more detail about how the proposed foreclosure eviction protections would work, the new rule "would apply to both federally-backed and private mortgages for primary residences," according to Smith. "Until now, federal mortgage protections have only applied to federally-backed mortgage loans. According to the National Housing Law Project, 14.5 million (30%) of all mortgages are privately held."
"Current rules require borrowers to be 120 days delinquent before the foreclosure process can start," and the new rule would loosen "make the process of getting a homeowner into an affordable payment agreement faster, and with less paperwork."