The Consumer Financial Protection Bureau said Monday it is considering new rules aimed at averting a wave of foreclosures later this year when millions of homeowners are no longer allowed to put off making their mortgage payments.
Last year, the federal government suspended foreclosures and evictions for mortgages insured by the Federal Housing Administration as the coronavirus pandemic left millions of people unemployed. Fannie Mae and Freddie Mac did the same for borrowers in single-family homes with loans backed by the two mortgage buyers. The initiatives offered borrowers relief for up to one year and suspended late charges and penalties.
As of February, nearly 3 million U.S. homeowners were behind on their home loans, with about 2.1 million mortgages in forbearance and at least 90 days late, according to the CFPB. If current trends continue, there still may be 1.7 million such loans by September, the CFPB said.
One rule proposed by the agency would prohibit mortgage servicers from starting the foreclosure process before Dec. 31. The CFPB is also considering whether to permit servicers to initiate foreclosures before the end of this year, in certain cases, such as if they've made efforts to contact an unresponsive borrower.
The CFPB is also weighing a rule that would allow servicers to offer “certain streamlined loan modification options” to borrowers with hardships caused by the pandemic, and changes to ensure servicers are notifying borrowers of their options in a timely basis. The agency is seeking public input on its proposed rule changes through May 11.