The Consumer Financial Protection Bureau (CFPB) has announced a new rule for prevention Foreclosures in situations where they can be avoided. The new rule, which went into effect on August 31st, requires most mortgages service provider Help borrowers indulgence find workable repayment options before going into foreclosure proceedings.
The central theses
- The Coronavirus Aid, Relief and Economic Security (CARES) Act allowed millions of Americans to suspend or reduce their monthly mortgage payments without the risk of foreclosure, a process known as forbearance.
- With the CFPB’s new rule, most mortgage servants are banned from initiating the foreclosure of a loan that is in forbearance unless they contact the borrower first and offer them meaningful options to help them in to stay in their homes.
- The new rule went into effect on August 31, 2021, but since it’s temporary, homeowners who have defaulted on loans should reach out to their service providers soon.
This is how the new mortgage rule works
The coronavirus pandemic has had a significant impact on millions of homeowners, and the Coronavirus Aid, Relief and Economic Security (CARES) Act provided much-needed relief in the form of deferral plans for borrowers who could not afford their monthly payments. The plans allowed the homeowner to temporarily pause or reduce their mortgage payments.
These protections have now expired in many cases, but homeowners with FHA, USDA or VA mortgages who have not taken the forbearance can apply for a COVID-related forbearance until September 30, 2021. In the case of mortgages made by Fannie Mae. or Freddie Mac, there is no deadline for filing a COVID-related injunction.
For homeowners who are currently in default, the new rule states that most mortgage managers must now notify them of repayment or other options that can help them avoid foreclosure. Generally, lenders cannot begin foreclosure until January 1, 2022.
Since the new rule is temporary, the CFPB urges homeowners who find themselves in this situation to contact their mortgage administrator as soon as possible while this rule is still in effect rather than waiting for the Administrator contacted them. The CFPB also suggests dealing with a recognized housing advisor even before you contact service.
Is my mortgage covered?
The new CFPB rule applies to state mortgages, which includes the types listed above. However, home equity loans and lines of credit, reverse mortgages, and investment property loans are not eligible. Certain small mortgage service providers are also not obliged to comply, according to the CFPB. If you are not sure if you are eligible, contact your mortgage service provider directly.