Since the start of the COVID-19 pandemic, millions of homeowners have benefited from the mortgage relief programs offered by the federal government, and some private lenders. Now that a year has passed, approximately 2.5 million homeowners are still enrolled in some sort of mortgage relief program, whether it be payment suspension or mortgage forbearance, according to the Mortgage Bankers Association (MBA).
It is for this reason that the Consumer Financial Protection Bureau (CFPB) wants to extend these provisions and programs further into the future to ensure that these homeowners are not forced into foreclosure.
Their concerns are valid. According to the MBA report, five percent of homeowners who are benefiting from the forbearance programs are currently delinquent on their mortgage payments. As the current forbearance programs expire, this number will likely go up.
To help aid struggling homeowners, the CFPB is proposing a new rule that would establish what is called a “temporary COVID-19 emergency pre-foreclosure review period.” What this period would do is keep mortgage servicers from initiating foreclosure proceedings until after December 31, 2021.
Under this new rule, loan servicers would be prevented from starting the foreclosure process until the homeowner is at least 120 days delinquent on his or her mortgage.
The forbearance programs created at the start of the COVID-19 pandemic through the CARES Act were mostly focused on federally backed mortgages provided through servicers, such as Fannie Mae, the Federal Housing Administration (FHA), the Department of Housing and Development (HUD), and Freddie Mac. Many private lenders followed suit and created their own programs to assist struggling borrowers. The new rule proposed by the CFPB would protect all types of home loans, including federally backed ones, as well as private loans.
The CFPB has also proposed a more streamlined process for modifying home mortgages. These modifications include reducing the interest rate on the original mortgage, reducing monthly payments, and extending the terms of the loan. This new process would allow lenders to modify mortgages based on incomplete applications, helping those who are not able to provide all of the financial documentation that has traditionally been required before the application could be approved. This streamlined process would only be available for modification applications that do not increase the homeowner’s monthly payments or extend the original loan term for more than 40 years.
The rule is currently only a proposal. The public can now make official comments through May 11. At that time, the CFPB will be able to issue a final rule.
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Choosing the right attorney can make the difference between keeping your home or losing it in foreclosure. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure, please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com
