Millions of homeowners who are struggling to make their mortgage payments due to the coronavirus pandemic could get a fresh reprieve under new rules proposed this week by the Consumer Financial Protection Bureau.
The plan would essentially prevent mortgage servicers from starting foreclosure proceedings until after Dec. 31, 2021, the CFPB said in a statement. More than 3 million households are behind on their mortgage payments, and nearly 1.7 million will exit their forbearance period in September.
"Millions of families are at risk of losing their homes to foreclosure in the coming months, even as the country opens back up," CFPB Acting Director Dave Uejio said in a statement.
Bureau officials said the proposal is intended to give borrowers who had delayed or stopped paying their mortgage a chance to resume, or modify, their monthly payments before lenders move to take ownership or sell the home to recover the lost money.
The agency proposed a new rule that would prevent servicers from starting foreclosure proceedings until after Dec. 31. The intent, bureau officials said, is to give borrowers coming off forbearance time to consider their options, such as whether they need a mortgage modification to reduce their monthly payments. The restriction would apply only to mortgages on homes used as primary residences.
“The nation has endured more than a year of a deadly pandemic and a punishing economic crisis,” Uejio said. “We must not lose sight of the dangers so many consumers still face.”
In February, President Biden directed federal housing regulators to extend mortgage forbearance programs for an additional six months and prolong other foreclosure relief programs.
Mortgage giants Fannie Mae and Freddie Mac also extended their forbearance and foreclosure programs in February. Individuals with federally backed properties can defer their mortgage payments for up to 15 months.