US Consumer Supervision Authority Finalizes Rule Restricting Mortgage Buyouts

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WASHINGTON (Reuters). On Monday, the U.S. consumer watchdog agency said it is finalizing a rule that will restrict mortgage services from buying out borrowers who are overdue on mortgages, a lifeline for hundreds of thousands of homeowners suffering from the COVID-19 pandemic.

The Consumer Financial Protection Bureau (CFPB) in April proposed, among other things, a new verification process that would typically prohibit mortgage service providers from starting foreclosure before December 31, 2021. Its goal is to help approximately 900,000 homeowners exit COVID-19 mortgage vacations or abstinence programs in the coming months.

“As the country moves from a COVID-19 emergency to an economic recovery, we cannot restrain ourselves from the dangers we still face,” said CFPB Acting Director Dave Weggio.

“An unchecked wave of foreclosures will rob billions of dollars in wealth from black and Hispanic communities hardest hit by the pandemic,” he added.

The new rule applies to loans for main residential buildings and will take effect on August 31, 2021.

However, in general, this does not apply to small service companies and excludes some groups of homeowners, the agency said in a statement.

These include homeowners who have abandoned their property; Delay mortgage payments for more than 120 days and did not respond to inquiries from their mortgage maintenance staff within 90 days; or those who have been assessed and there are no options available to avoid foreclosure.

Michelle Price reporting; Edited by Aurora Ellis

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