The Consumer Financial Protection Bureau’s proposed COVID-19 mortgage servicing rule may protect you from foreclosure through the end of the year (2021) if you are experiencing financial hardship due to the ongoing pandemic.
The Consumer Financial Protection Bureau, or CFPB, sets forth different regulations to assist consumers. The CFPB also enforces different regulations and creates mortgage servicing rules by which mortgage servicers must abide.
The CFPB just proposed a new rule which would amend what is known as Regulation X of the Real Estate Settlement and Procedures Act, or RESPA.
This new proposed rule will extend some homeowner protections through the end of the year.
There are 2 points to remember, however:
- There will remain the question of whether this new rule applies to you;
- And that mortgage forbearance does not mean mortgage forgiveness.
If you are in currently in an active forbearance, you should know when your mortgage forbearance ends. Developing a plan to deal with your delinquent mortgage payments is important.
The loan modification process can be frustrating and knowing your options can give you peace of mind. At Allums Welsch, PC, we can help you understand you loan modification options and help you submit your loan modification application.
If this new proposed rule is enacted, it will protect many homeowners from foreclosure at least until the end of the year. However, not all homeowners will have protection.
Marc Dann, Esq. recently sent me an email where he said, “mortgage companies are in the business of making money—not friends”. This is such a true statement.
Mortgage companies make mistakes in reviewing homeowners loan modification applications. Do not let this happen to you! I have seen this with my own eyes.
It important to keep copies of all documents, emails, letters, or other correspondence you receive from your mortgage company. Also, keeps copies of everything you send to your mortgage company. Especially if you are in a mortgage forbearance or if are applying for a loan modification. When dealing with a mortgage company, things can easily fall through the cracks and disappear.
What about the CFPB’s new proposed rule? How do you know if it applies to you?
First, the provisions in the proposal, if finalized, would still only be applicable to a mortgage loan that is secured by a property that is a borrower’s principal residence.
Second, if your mortgage is serviced by a small servicer, then the proposed rule would not apply to you and you mortgage would not get these extra protections. A small servicer is defined at 12 § CFR 1026.41(e)(4).
You may want to check out this article and video where I did that discuss who owns your mortgage.
Generally, a small servicer as defined by Regulation Z of RESPA as one whose portfolio of loans is 5,000 loans or less.
Likewise, certain non-profits and financing authorities whose portfolios consist of 5,000 loans or less may be exempt from these rules.
If your mortgage is not serviced by a “small servicer” and the property is your principal residence, this new rule creates a pre-foreclosure window where the mortgage company may review your mortgage with loosened restrictions regarding modifications and forbearances.
This will give the servicers more flexibility in dealing with the number of people exiting mortgage forbearances with the goal of preventing a tidal wave of foreclosures.
During the first quarter of 2021, I have seen an uptick in debt collection.
More lawsuits are being filed by debt collectors and more wage garnishments are be filed.
Therefore, it would not surprise me that as soon as the foreclosure moratorium is lifted, a wave of foreclosures will happen.
If live in Birmingham, Bessemer, Tuscaloosa, or the surrounding areas, call one of our offices to schedule your free consultation to talk about submitting your loan modification application or filing chapter 13 bankruptcy to stop a foreclosure.
Let us help you explore every available option.
