On Monday, the Consumer Financial Protection Bureau (CFPB) issued a final rule for its federal mortgage servicing regulations as part of an effort to create safeguards for the phaseout of the foreclosure moratorium. The rule, called the 2021 Mortgage Servicing COVID-19 Rule, comes into effect on Aug. 31, 2021. In total, over 7 million consumers utilized the COVID-19 hardship forbearance offering, and 2 million remain in forbearance today, making an orderly transition away from the program vital in order to maintain the housing market’s stability.
The new rules focus on efforts to avoid foreclosures by giving borrowers meaningful opportunities to pursue loss mitigation, allowing servicers to help borrowers faster, and communicating to borrowers all of their options to avoid foreclosure. Foreclosures will still be permitted to start if a borrower has abandoned their property, if the mortgage was 120 days behind before March 1, 2020, if the borrower is 120 days behind and has not responded to outreach, or if the borrower has been evaluated for options and none will avoid foreclosure.
CFPB plans on working further with federal agencies to ensure an equitable and orderly transition into a post-pandemic housing market