What You Need to Know
- The agency's plan is an attempt to give borrowers time to find ways to make payments once pandemic relief ends.
- The CFPB will accept comment on the proposed mortgage rule until May 10.
- The rule only applies to institutions with more than 5,000 mortgages.
Saying that the pandemic has caused a “shocking increase in housing uncertainty,” the CFPB proposed Monday to stop mortgage servicers from foreclosing on most home loans until after the end of the year.
The plan outlined by the agency is an attempt to give borrowers time to find ways to make payments once pandemic relief ends.
“We are going to use everything in our toolbox to prevent avoidable foreclosures,” Acting CFPB Director Dave Uejio told reporters in a telephone conference call. “This rule is one of the sharpest tools in our toolbox.”
He said the agency wants “to ensure that servicers and borrowers have time to work together.”
Last week, the agency said it expects mortgage servicers to assist millions of homeowners as pandemic protections end and will closely monitor efforts to help borrowers remain in their homes.
That follows the agency’s announcement that it was rescinding guidance issued last year that gave financial services companies flexibility in following agency rule as they faced the coronavirus crisis.
The CFPB will accept comment on the proposed mortgage rule until May 10, and some form of the rule is expected to become effective on Aug. 31. The rule only applies to institutions with more than 5,000 mortgages.