WASHINGTON—Fannie Mae and Freddie will not be permitted to make a first notice or filing for foreclosure that would be prohibited until new rules from the CFPB take effect, the Federal Housing Finance Agency (FHFA) announced.
The CFPB final rule, Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), prohibits servicers from making a first notice or filing for foreclosure in most cases covered by the rule before Dec. 31, 2021. Servicers will still be able to make a notice or filing for foreclosure on abandoned properties and those that had a foreclosure referral prior to March 2020, along with certain other exceptions, according to the FHFA.
The CFPB's final rule will take effect Aug. 31, 2021. Fannie and Freddie’s moratoriums on single-family foreclosures and real estate owned (REO) evictions will expire on July 31, 2021. Requiring Enterprise servicers to follow the CFPB's new protections a month before the CFPB rule takes effect will protect borrowers from foreclosure and provides certainty for servicers about Enterprise expectations, according to the FHFA.
“The COVID-19 pandemic has created many financial challenges for families. Through no fault of their own, many of these families had to rely on COVID-19 forbearance to stay safe in their homes during the pandemic,” Acting FHFA Director Sandra L. Thompson said. “Today, many families' finances are improving allowing them to exit forbearance. The protections FHFA is putting in place today will protect vulnerable families as they begin their financial recovery from the impact of the COVID-19 pandemic.”