CFPB Issues Rules to Help Prevent Surge of Foreclosures and Protect American Economy

On June 28, the Consumer Financial Protection Bureau (CFPB) announced the finalization of changes to federal mortgage serving regulations that would bolster economic recovery efforts. The announcement, which coincides with the end of the foreclosure moratoria, will protect borrowers as their terms of forbearance end. Specifically, the rules create temporary safeguards, such as giving homeowners additional time to create loan modifications, streamlining loan modifications, increased outreach to borrowers, lower monthly mortgage payments, or the opportunity to sell homes prior to receiving foreclosure notices. These rules will not be in effect for borrowers who have abandoned their property or were behind on mortgage payments prior to March 1, 2020. The new rules are set to take effect on August 31, 2021. Acting CFPB Director Dave Uejio noted that these rules were established to protect distressed communities that were at risk of losing value due to a foreclosure crisis, an event which could destabilize housing markets. With two million homeowners still in forbearance, this newly established policy could help mitigate some of the worst effects of the transition. For more information on the new CFPB regulations, click here.

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