Pandemic Mortgage Relief Programs May Get Extended
The CFPB Looks For 2022 Extension
The Consumer Financial Protection Bureau (CFPB) wants to extend the payment suspension and mortgage forbearance programs put in place in response to the COVID-19 pandemic. With these emergency programs coming to an end in the fall, the CFPB is stepping in to help.
The CFPB is proposing a new rule which would prevent mortgage servicers from starting foreclosure proceedings until after December 31, 2021. That would be on top of the existing rule that prevents lenders from foreclosing on a homeowner unless the loan is more than 120 days past due. The CFPB is seeking public comment through May 11 after which it will issue its final rule.
CFPB Wants to Streamline Loan Modifications
In addition to extending the current programs, the CFPB wants to make the loan modification process easier for homeowners. It wants loan servicers to provide borrowers with loan modifications even if applications are incomplete.
To get a loan modification, borrowers typically need to provide several documents including ID, proof of income, taxes, and bank statements. The CFPB believes that a streamlined process will enable homeowners to get payment relief faster. It will only be used for modifications which extend the terms of the mortgage more than 40 years and do not raise the monthly payments for the homeowners.
Mortgage Holders Face Challenges
Though the economy is beginning to reopen and recover, many mortgage holders are struggling. Roughly 2.5 million homeowners are currently enrolled in emergency programs. Despite the relief, about 5% of homeowners are currently delinquent on their mortgages.
The proposed CFPB rule will apply to government-backed loans and private mortgages. The past year has been full of changes for the housing market and for homeowners. These programs may help homeowners weather another unpredictable stretch.
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