- The foreclosure moratorium is lifting at the end of July, putting millions of homeowners at risk.
- The Consumer Financial Protection Bureau issued new rules to help prevent foreclosures.
- The rules would establish safeguards and require better outreach from mortgage servicers to borrowers.
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To provide financial relief to homeowners during the pandemic, President Joe Biden enforced a foreclosure moratorium to keep people safely in their homes. With that ban expiring at the end of July, Biden isn’t extending it but is otherwise working to cut down on foreclosures as much as possible.
On Monday, the Consumer Financial Protection Bureau (CFPB), which ensures consumers are treated fairly, issued new rules to facilitate a smooth transition once the ban on foreclosures expires. “As the nation shifts from the COVID-19 emergency to the economic recovery, we cannot be complacent about the dangers we still face,” CFPB Acting Director Dave Uejio said in a statement.
According to a press release, over 7 million homeowners took advantage of the foreclosure moratorium during the pandemic, and today, 2 million homeowners are still in forbearance.
The rules will establish temporary safeguards so borrowers will have time to figure out their options before foreclosure. Mortgage servicers will also receive new guidelines to best help borrowers avoid foreclosures. The new rules will:
- Require servicers to meet temporary procedural safeguards before initiating foreclosures for certain mortgages;
- Allow servicers to streamline the loan modification process for borrowers;
- And require servicers to increase their outreach to borrowers before initiating foreclosures.
The new rules will go into effect on August 31, 2021.
“An unchecked wave of foreclosures would drain billions of dollars in wealth from the Black and Hispanic communities hardest hit by the pandemic and still recovering from the impact of the Great Recession just over a decade ago. An unchecked wave of foreclosures would also risk destabilizing the housing market for all consumers.”
This is not the first step the Biden administration has taken to help renters and homeowners during and beyond the pandemic. Last week, for example, the Center for Disease Control and Prevention (CDC) extended the eviction moratorium by an additional month through July.
Two weeks ago, the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) announced new calculations to determine mortgage assistance that would make it easier for people with student debt to buy a home – especially people of color.
“For people of color, especially Black people, homeownership is wealth,” HUD Secretary Marcia Fudge said. “It’s not only wealth to us, but it’s generational wealth.”