New CFPB Mortgage Rules For Homeowners

The 2020 pandemic harmed homeowners all over the country, making it hard for them to stay up-to-date on mortgage loans. In fact, the United States hasn’t faced a housing market like this since the Great Recession. Foreclosure filings have been on hold because of pandemic protections that stopped foreclosures from happening and allowed special forbearance for homeowners during the pandemic. As these protections wind down, millions of homeowners are going to face the foreclosure process.

If you’re one of the millions of people anticipating the end of pandemic protections for homeowners, you’re probably wondering what that could mean for you and your family. Maybe you are one of these unfortunate people who are struggling to stay current on their mortgage due to COVID-19-related financial hardships and are now facing the possibility of losing your home.

With the CARES Act mortgage forbearance coming to a close, the CFPB is determined to find a solution that will help homeowners and servicers by combatting this “wave” of incoming foreclosures.

Fortunately, the Consumer Financial Protection Bureau (CFPB) issued some new mortgage servicing rules that will help homeowners through these difficult times by offering easier and faster loan modification options and making foreclosure a last resort. 

If you are a homeowner concerned about maintaining your mortgage loan payments, or scared of what an expired CARES Act on forbearance could mean for you and your family, then contact our experienced foreclosure attorneys at Denbeaux & Denbeaux Law. Our foreclosure defense attorneys work with people through the foreclosure process to get you back on the right track. 

What Did the CARES Mortgage Relief Act 2020 Do?

In 2020, the Consumer Financial Protection Bureau (CFPB) released the Coronavirus Aid, Relief, and Economic Security (CARES Act) Mortgage Payment Forbearance. The CARES Act offered mortgage forbearance options to borrowers who suffered financially due to COVID-19. 

The mortgage forbearance CARES Act end date was initially set to expire in March of 2021, but was extended until June 30, 2021 because of the great need for additional assistance. It was extended again through August 30, 2021, and further extended through the end of December 2021 for some servicers, so long as certain safeguards are provided for consumers. Many mortgage servicers, however, will soon be released to file the foreclosure complaints they have had ready and on hold for over a year.

With the CARES Act of mortgage relief closing for good this time, reports of widespread home foreclosures are fast approaching. “At the CFPB, we are working hard to help homeowners and renters as the U.S. begins to turn a painful crisis, caused by the pandemic, into a robust recovery,” says CFPB Acting Director Dave Uejio

Borrowers need to be prepared now that these pandemic protections are expiring. It’s up to you to do what you can to stay current on your mortgage and make sure you and your family have a place to call home. 

2021 Mortgage Servicing COVID-19 Rule

The CFPB is doing everything possible to add additional provisions that will help homeowners and their families by making the loan modification process easier and faster for borrowers and servicers. 

However, if you’re missing payments and can’t become current on your mortgage, your situation may put your home at risk. Talking with an attorney to help you prepare for a potential foreclosure as the CARES forbearance ends is a step in the right direction to save your home or stay in it for as long as possible.

The CFPB new mortgage servicing rules will amend some previously suggested rules in Regulation X of the Real Estate Settlement Procedures Act that regard additional assistance for borrowers experiencing COVID-19-related hardships.

1. Procedural safeguards

From August 31, 2021 to December 21, 2021, the servicer is not allowed to refer foreclosure on a borrower that is 120-days delinquent until they fulfill one of the following safeguards:

  • The borrower is evaluated based on a complete loss mitigation application and existing foreclosure protection conditions are met
  • The property has been abandoned by the borrower
  • The borrower stops responding to the servicer or the servicer doesn’t receive any communication from the borrower for 90 days prior to the foreclosure

The safeguards are not required if:

  • The foreclosure referral happens on or after January 1, 2022
  • The borrower was more than 120 days delinquent prior to March 1, 2020
  • The applicable statute of limitations expires before January 1, 2022

With these rules, there’s a lot of room for error on behalf of servicers, meaning that you may find yourself in a different situation. A foreclosure attorney’s job is to hold servicers and mortgage companies accountable to these rules, so hiring a lawyer may help you defend your rights.

2. Streamlined loan modifications

This allows servicers to offer loan modification options to borrowers based on the evaluation of an incomplete application. For servicers to qualify for this, the options must:

  • Not extend the term of the loan to be more than 40 years past the date that the new modification goes into effect
  • Not increase the price or interest rate of the loan that was required before the new modification
  • Not add interest onto payments that the servicer allows to be delayed
  • Be available to borrowers that experienced or are experiencing COVID-19 hardships
  • End any pre-existing delinquency when the borrower accepts the modification
  • Not charge additional fees connected to the loan modification

Working with an attorney to negotiate your loan modification may help you get a better outcome that helps you stay current on your mortgage in the future. 

3. Reasonable diligence

Adds more rules for how servicers need to renew reasonable diligence efforts. These rules make sure that services are doing everything in their power to ensure homeowners are aware of their options and that borrowers have all the paperwork they need.

A foreclosure attorney can help you make sure that servicers stick with these rules to make sure your mortgage doesn’t get caught up in a paperwork mess that puts your home at risk. Servicers are notorious for not complying with “reasonable” diligence standards and haven’t shown a great history of this in the past, as many who were foreclosed upon during the Great Recession can attest.

4. Live contact info

Temporarily requires servicers to give specific and additional information to delinquent borrowers, based on if they’re in forbearance or not. This only applies until October 1, 2022.

For borrowers not in forbearance:

  • Program availability statement – forbearance programs that are available for the borrower
  • List and description of available programs – what programs are applicable and what the borrower must do in order to be evaluated for those programs
  • Homeownership counseling services

For borrowers in forbearance:

  • End date – when the forbearance program is scheduled to end
  • List and describe available programs – loss mitigation programs that are available and how borrowers can apply for them
  • Homeownership counseling services

Even though you can talk to a bank directly about your foreclosure and they may seem friendly and tell you that they want to work with you, they are not on your side. Working with an attorney to represent you in foreclosure proceedings can help you from making a mistake when dealing with your mortgage servicer. 

Why the CFPB New Mortgage Rules Are Important

The CFPB was originally intending to stop foreclosures altogether until the beginning of 2022 but concerns were raised about the housing market’s ability to sustain during that period of inactivity. With real estate being the number one industry in the United States, the CFPB decided to amend the originally proposed rule with a Final Rule that will be helpful to both borrowers and servicers. 

There are some key benefits that the CFPB final mortgage servicing rules will have: 

1. Prevent a rise in homelessness

With more safeguards and stipulations put into place, many foreclosures will be halted and more loan modification options will be available to those who suffered from COVID-19 complications. This gives homeowners more time to get caught up on their mortgage and prevents millions of families from losing their homes.

If your family will otherwise be homeless if you’re foreclosed on, there may be special arguments to be made by an experienced foreclosure attorney to prevent or delay foreclosure.

2. Stimulate the economy

With the wave of foreclosures rolling in, people will be focusing on getting caught up on their mortgage. That means any extra money homeowners have will be spent on bills rather than in the economy. Offering modification and mitigation options to homeowners facing foreclosure will help put more money in their pockets that will help stimulate the economy.

While this doesn’t do much to help homeowners immediately, this may help you be able to make payments as the economy reopens and money starts flowing again. If you’re able to make payments again after being in CARES forbearance, negotiating a loan modification may be the best route.

3. Assist the housing market

With fewer people able to pay their mortgage and more houses going into foreclosure, housing and rental prices have skyrocketed making it even harder for potential homeowners to find a place to call their own. The proposed Final Rule makes sure the housing market has sufficient aid to remain sustainable until the beginning of the new year.

The housing market took a hit due to COVID-19, but hopefully the CFPB amendments to mortgage servicing rules will be helpful for everyone involved. These new proposed mortgage rules will help struggling homeowners financially and give servicers a break from overwhelming paperwork and overdue payments. 

Be Prepared With a Foreclosure Defense Attorney

Foreclosures and loan modifications can be a long and strenuous process and the expiration of the CARES Act adds another layer of unnecessary stress on someone dealing with an already difficult situation. If you’re a homeowner facing foreclosure because of COVID-19-related hardships and aren’t sure of what step to take next, then contact one of our foreclosure defense lawyers. 

At Denbeaux & Denbeaux Law, we are dedicated to taking the stress off our clients and guiding them through the foreclosure process with no additional stress. Josh Denbeaux is an experienced foreclosure defense attorney who is ready to fight for your rights as a homeowner. Josh works alongside you to answer all of your questions and make sure you get the best results possible.

Are you ready to take the next step towards getting your home and your life back? Contact us today.

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