WASHINGTON–A consumer group is praising the CFPB’s final rule under the Real Estate Settlement Procedures Act (RESPA) related to helping homeowners impacted by the COVID-19 pandemic, but said the new protections need to be extended.
As CUToday.info reported, the rule changes are designed to help stave off unnecessary foreclosures.
It’s a change the Bureau should “vigorously enforce” to ensure homeowners receive the intended protections, according to the National Consumer Law Center (NCLC).
“The COVID-19 pandemic has led to record numbers of homeowners struggling to pay their mortgages, especially in communities of color,” said NCLC Staff Attorney Sarah Mancini. “The Bureau’s final rule has the potential to significantly impact mortgage servicer behavior, making it more likely that these borrowers can obtain loan modifications and save their homes.”
According to the CFPB, more than two-million homeowners remain in payment forbearances that will end soon.
‘Need to Communicate’
“Servicers will need to communicate with record numbers of homeowners in order to process them for permanent loan modifications at the conclusion of the forbearance plans,” the NCLC said. “Many of these borrowers will exit forbearances between September and December 2021.”
“The Bureau’s decision to sunset the foreclosure safeguards on Dec. 31, 2021, however, will leave the hundreds of thousands of borrowers who exit forbearances after that date or are unable to obtain a loan modification option by that date without protection,” the NCLC continued in its statement. “Based on projected forbearance end dates and expected servicer backlogs, many borrowers will still be addressing their COVID hardships well into 2022. The Bureau should extend the compliance period in order to provide protection into 2022 for borrowers who are attempting to communicate with their servicer about loss mitigation options.”
‘Effective Enforcement’ Needed
“At this point, the Bureau must effectively enforce the rules, comprehensively supervise servicers, and help borrowers address servicer non-compliance,” commented National Consumer Law Center Staff Attorney Steve Sharpe. “Servicers will be more likely to ensure that qualified homeowners can avoid foreclosure in response to vigorous oversight. The CFPB’s supervision and enforcement activity over the next six months will be just as important as its regulatory actions. This need is especially pronounced for private market loans that are not bound by the rigorous protocols of government-backed loans.”
The final rule will take effect August 31, 2021.