US consumer watchdog offers some sort of lifeline for troubled mortgage borrowers


FILE PHOTO: Workers install roof trusses on a new home in Arvada, Colo. July 10, 2017. REUTERS / Rick Wilking / File Photo

WASHINGTON (Reuters) – The U.S. consumer watchdog on Monday released a proposal to allow homeowners who have fallen behind on mortgage payments due to the COVID-19 pandemic the opportunity to be assessed thoroughly before the mortgage companies go into foreclosure.

The rule changes proposed by the Consumer Financial Protection Bureau (CFPB), which are subject to public consultation before being passed, would give borrowers more time to settle their mortgage payments with agents by establishing a review period for their mortgage payments. emergency before the lockdown for COVID. -19 related disruptions until December 31, 2021, the agency said in a press release.

The proposal would also temporarily allow mortgage agents to offer certain loan modifications to borrowers facing difficulties related to the pandemic. The agency is also seeking public consultation on changes to lenders’ obligations regarding early intervention and due diligence before evicting defaulting homeowners.

Service providers play a vital role in the mortgage finance ecosystem, receiving payments from borrowers and forwarding them to investors, tax authorities and insurers.

“Millions of families are at risk of losing their homes to foreclosure in the coming months, even as the country opens up again,” CFPB Acting Director Dave Uejio said on Monday.

“Our proposal aims to enable service providers to get borrowers to affordable payments faster, while putting in additional guardrails to ensure the changes are consumer friendly,” he said. to journalists.

The agency found that as of February, there were nearly 3 million homeowners behind on their mortgages, with about 2.1 million mortgages outstanding and at least 90 days past due. If current trends continue, there could be 1.7 million of these loans in September 2021, the agency said.

The CFPB said the measure would ensure that service providers and borrowers have the tools and time to work together to avoid avoidable foreclosures, as existing emergency protections for homeowners will begin to expire later this year. year.

Last week, the CFPB issued an enforcement bulletin warning mortgage agents that the consumer watchdog would be closely monitoring how agents engage with borrowers.

Report by Katanga Johnson in Washington; Editing by Matthew Lewis

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