Millions of homeowners who are struggling to mortgage payments due coronavirus the pandemic could receive a new respite under new regulations that the US consumer surveillance agency plans to adopt this summer.
The Consumer Financial Protection Bureau (CFPB) will finalize a rule first proposed in April that would effectively prevent mortgage servicing organizations from starting foreclosure proceedings before December 31, 2021, Reuters reported, citing sources familiar with the matter.
The CFPB did not immediately respond to FOX Business’s request for comment.
Reuters said the CFPB plans to finalize the rule and put it into effect by the end of August, and agreed to exclude certain groups of borrowers after the industry said the offer was too broad and beyond the bureau’s statutory limits. Those who may be excluded from the new safeguards include borrowers who are in negotiations with their service provider to avoid foreclosure, but who have not yet applied for a deferral.
Borrowers who may have left their homes without trying to notify their caregivers, as well as those who do not respond to multiple requests from caregivers about whether they want to stay in their homes, may also be excluded.
According to Reuters, the exemptions are intended to limit the compliance burden on certain service providers and give them more flexibility in helping customers.
More than 2 million households are delaying mortgage payments and nearly 1.7 million will exit the abstinence period in September, according to the Mortgage Bankers Association. The limitation will only apply to mortgages on houses used as primary housing.
The bureau has previously said the proposal is aimed at giving borrowers who have delayed or stopped paying their mortgages the opportunity to resume or change their monthly payments before lenders take over or sell the house to recover lost money.
“Millions of families are at risk of losing their homes to foreclosures in the coming months, even if the country reopens,” CFPB Acting Director Dave Weggio said in an April statement.
In February, President Biden instructed federal housing regulators to extend mortgage abstinence programs for another six months and to extend other foreclosure assistance programs.
Mortgage giants Fannie Mae and Freddie Mac also expanded their abstinence and foreclosure programs in February. Owners of federally backed real estate can defer mortgage payments for up to 15 months.