Removing Barriers Blog

CUNA Files Objections to CFPB’s Proposed Foreclosure Moratorium
Posted May 10, 2021 by CUNA Advocacy

CUNA filed its comments regarding the Bureau’s proposed rule, Protections for Borrowers Affected by the COVID-19 Emergency. The proposal includes a moratorium on foreclosures of principal residences until January 1, 2022. CUNA strongly opposes this provision for several reasons: the Bureau lacks authority to implement the moratorium under RESPA; doing so is an unconstitutional restriction on mortgage servicers’ First Amendment rights and their right to petition the courts; and it is unnecessary as credit unions forecast of actual delinquencies will be lower than the Bureau indicates. In the proposed rule, the Bureau also proposes to allow mortgage servicers to offer certain streamlined COVID modifications based on incomplete applications.  CUNA strongly supports this change as it allows credit unions to make use of streamlined application procedures offered by Fannie Mae, Freddie Mac, and FHA without collecting a full application which is unnecessary for these programs. 

The third piece of the proposal is a moratorium on foreclosures of principal residences until January 1, 2022. The Bureau states it believes the moratorium is necessary because it believes mortgage servicers will be stretched so thin this fall that they will not be able to operate in compliance with Regulation X. CUNA strongly opposes this proposal for several reasons. Credits unions forecast of actual delinquencies will be relatively low compared to the number of people currently in forbearance and express confidence that they can return the majority of their members to paying status over the next year or so. Further, the Bureau lacks authority to implement the moratorium under RESPA and doing so is an unconstitutional restriction on mortgage servicers’ First Amendment rights and their right to petition the courts. CUNA urged the Bureau not to finalize the moratorium and to give credit unions the flexibility to manage their own capacity, make decisions on when it is appropriate to foreclosure, and to protect abandoned and vacant property when necessary.