You Just Got More Protection From Unscrupulous Lenders Trying to Foreclose Your Home.
With millions of homeowners defaulting on mortgage payments and an impending foreclosure moratorium that expires on July 31, the Consumer Financial Protection Bureau (CFPB) has added some new protections to help borrowers keep their homes. However, since lenders don’t always comply with the rules, you need to know what these new protections are so you can defend your interests.
Lenders should follow these steps if you are late in payments
To mitigate the cascade of foreclosures later this summer, the CFPB has set new rules for 120-day delinquent accounts. From 31 August to 31 December, the creditor cannot proceed with the foreclosure process until one of the following conditions is met:
- The Borrower has exhausted all repayment measures as part of a good faith effort to avoid foreclosure. This includes a completed Loss Mitigation Claim , which is a repayment plan that you can qualify for based on financial difficulties. The new rule states that “the maintenance staff must determine that the borrower is not eligible for any loss mitigation options and notify the borrower of them,” making it the responsibility of the lender to exhaust the option.
- The property has been abandoned in accordance with local and state laws.
- The borrower does not respond to information requests from the service personnel. If the landlord does not respond for more than 90 days, the process can continue.
In addition, to speed up the process, the CFPB permits mortgage servicing organizations to offer optimized loan modifications that do not require borrowers to resubmit their documents, as long as those loan modifications do not increase the borrower’s repayment.
Know your rights as a homeowner
With these rule changes, mortgage lenders must check to see if you qualify for a lower interest rate or other repayment schedule that makes repayment easier. However, some lenders do not always adhere to specific COVID regulations , so it is best to know your rights as a homeowner rather than relying on your mortgage provider to tell you what they are.
If you already know that you will not be able to pay off your mortgage at the end of the abstinence period, contact your loan agent to discuss your options. To learn more about what these options might be, check out this Lifehacker post .