CFPB will not accept being unprepared for an upcoming foreclosure crisis

Josh Fraser Apr 23rd, 2021 / Estated Episodes, Industry News, Cfpb, Foreclosures, Crisis

On 1st April, The Consumer Financial Protection Bureau (CFPB) has alerted mortgage servicers to take all precautionary measures to avert a surge of unnecessary foreclosures this winter. As per the Mortgage Bankers Association, about 2.7 million US-based homeowners are presently in forbearance on their debts. 

Among the borrowers, 2.1 million of them are at minimum 90 days behind on their loan payments. According to industry estimates, about 1.7 million applicants will leave forbearance programmes in September and subsequent months, many of whom are a year or beyond delayed on their loan repayments.

Regulations in the CARES Law, its adjunctions, and numerous executive orders made forbearance accessible to homeowners whose budgets were impacted by the coronavirus pandemic, allowing them to postpone payments. It takes roughly five months for the nationwide forbearance figure to fall entirely from 6% to under 5% since last week. Mortgage servicers would need additional supply to lend out to the massive array of homeowners who are expected to need loss reduction assistance once the national foreclosure postponements expire at the end of June 2021. Service providers will need to start planning at present to satisfy this demand.

The CFPB will keep a close eye on how servicers deal with buyers, react to their appeals, and implement programs for loss reduction. While using its ability to resolve enforcement problems that occur, the CFPB would assess a servicer's overall efficiency in supporting customers. The Consumer Financial Protection Bureau will strictly adhere to how effective mortgage companies are:

  • Being provident. Providers should contact the forbearance borrowers before their arrear completion period to give them enough time to apply for assistance.
  • Collaborating with homeowners. Issuers should ensure that borrowers have the relevant information and assist them in accessing paperwork and other information that consumers will use to assess whether they are eligible for assistance.
  • Tackling language barriers. The CFPB will monitor how lenders handle interactions with non-English residents.
  • Solving queries quickly.
  • Averting unnecessary foreclosures. The issuers need to follow all the foreclosures guidelines to assure that all borrowers have a chance to save their properties until foreclosure begins.

It will continue to review servicer activity under the Joint Statement on Supervisory and Enforcement Practices. The same will take place concerning the Mortgage Servicing Rules made during the COVID-19 Emergency and the CARES Law on 3rd of April, 2020, as long as issuers demonstrate efficacy in helping consumers, as stated in compliance notice.

The CFPB is an agency that has formed 9 years before, works to improve consumer finance systems by making regulations more efficient, implementing those rules faithfully and reasonably, and encouraging borrowers to adopt greater control of their financial affairs. Headquartered in Washington, D.C., CFPB has generated various personal finance resources for consumers. It has also attempted to educate customers about digital currencies such as Bitcoin. Previously, this year CFPB has filed complaints against Student Loan Pro, Judith Noh, and Syed Gilani for violation of consumer rights. Moreover, some other lawsuits are imposed against BrightSpeed Solutions, Yorba Capital Management, Nexus Services, Inc, and 1st Alliance Lending, LLC.

The CFPB intends to create compelling consumer financial markets to benefit investors, prudent vendors, and the overall economy in the future.

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