CFPB Proposes Mortgage Servicing Changes to Prevent Wave of COVID-19 Foreclosures

Orrick - Finance 20/20
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Orrick - Finance 20/20

On April 5, the Consumer Financial Protection Bureau (CFPB) proposed rule changes intended to prevent avoidable foreclosures as emergency federal foreclosure protections put in place due to the global pandemic expire. The rules aim to assist both borrowers and servicers to navigate an expected surge of borrowers exiting forbearance. The proposed rules (1) provide a pre-foreclosure review period that generally prohibits servicers from starting foreclosure until after December 31, 2021; (2) permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application; and (3) update required servicer communications to keep borrowers informed of their options. Release.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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