However, today the president pushed new regulations again, although not directly specifying the real estate market, but the new regulations also indirectly prohibit home foreclosures again until 2022.
For those who are still on the sidelines, it looks like the market won’t be able to cool down for a while!
The forbearance and mortgage deferment programs introduced by lenders and the federal government during the new crown epidemic reportedly benefited millions of people. However, these emergency programs are set to expire later this year and the Consumer Financial Protection Bureau (CFPB) is working on new measures to ensure that millions of families are not forced into foreclosure (foreclosure).
Data from the Mortgage Bankers Association (MBA) for the week of March 21, 2020, shows that a year after the outbreak, about 2.5 million homeowners are still enrolled in some form of loan deferment program. However, in its latest report, the MBA found that even with these programs in place, 5% of homeowners are still currently delinquent on their mortgages.
And with many of the emergency programs in place during the epidemic expiring this June, the number of delinquent mortgages is likely to grow exponentially.
Emergency protections for homeowners will expire later this year, and by the fall, a large number of borrowers will need assistance from their servicers,” CFPB Acting Director Dave Uejio said Monday. the CFPB is proposing changes to mortgage servicing rules to ensure servicers and borrowers have the tools and time to work together to prevent avoidable foreclosures, which foreclosures would disrupt people’s lives, forcibly displace children, and impose additional costs on those who can least afford them.”
In response, the CFPB proposed a new rule that would create a “temporary new crown emergency pre-foreclosure review period” that would essentially prevent mortgage servicers from initiating foreclosure proceedings before December 31, 2021.
The new review period will be in addition to the existing rules. Under the current rules, loan servicers are prohibited from starting the foreclosure process within 120 days of a homeowner falling behind on their mortgage.
Many of the current deferment programs were established under last year’s CARES Act and apply to federally guaranteed loans from agencies such as Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Housing and Urban Development. Private lenders and servicers have also established their own loan deferment programs, and the CFPB’s proposed new rules would protect all homeowners, including those who obtain their mortgages through private lenders such as banks.
The plan released Monday by the CFPB is only a proposal at this time. The agency will seek public comment until May 11 and then issue final regulations.
In addition to requiring a review by mortgage servicers, the CFPB is proposing to streamline the loan modification process. Under this process, homeowners can typically apply for a lower interest rate, longer loan term and/or reduced monthly payments.
The streamlined process would allow servicers to offer some loan modification options based on incomplete applications. Typically, borrowers are required to submit extensive documentation, including proof of income such as pay stubs, tax returns and recent bank statements, before a servicer can make a decision.
The CFPB says streamlining this process will allow servicers to provide less burdensome payments to homeowners more quickly. This streamlined process will only apply to loan modification options that do not increase a homeowner’s monthly payment, extend the mortgage term beyond 40 years or charge any fees.
In February, President Biden directed federal housing regulators to extend the mortgage deferment program for another six months and extend the ban on home foreclosures until June 30 to help homeowners suffering financial hardship in the new crown epidemic, a move that covers about 70 percent of mortgages on single-family homes in the United States.
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