- The Consumer Financial Protection Bureau proposes changing some rules in order to help prevent avoidable foreclosures as emergency federal foreclosure protections, that were implemented in response to the COVID-19 pandemic, expire.
- The proposal seeks to ensure that mortgage servicer and borrowers have "the tools and time they need to work together to prevent avoidable foreclosures, recognizing that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain," the bureau said in a statement.
- The proposed changes include:○ Giving borrowers more time — the proposed rule would provide a special pre-foreclosure review period that would generally prohibit services from starting foreclosure until after Dec. 31, 2021. The CFPB is seeking public input on that date and as to whether there are more limited ways to achieve the same purpose, such as allowing earlier foreclosure if the servicer has taken certain steps to evaluate the borrower for loss mitigation or made efforts to contact an unresponsive borrower.○ Allowing servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application.○ Temporary changes to certain required servicer communications to make sure that, during the crisis, borrowers receive key information about their options at the appropriate time.
- As of February 2021, there were almost 3M homeowners behind on their mortgages, with an estimates 2.1M mortgages in forbearance and at least 9 days delinquent, the CFPB.
- Industry data suggest that almost 1.7M borrowers will exit forbearance plans in September and the following months.
- Mortgage servicer stocks are falling today — New Residential (NRZ -1.2%), Mr. Cooper (COOP -0.6%), Ocwen Financial (OCN -1.4%), and PennyMac Financial Services (PFSI -4.5%).