Removing Barriers Blog

No Foreclosure Moratorium - CFPB Issues Finalized Mortgage Servicing Protections
Posted June 28, 2021 by CUNA Advocacy

On Monday, the CFPB issued its finalized mortgage servicing protections. The Bureau did not finalize a foreclosure moratorium until January 1, 2022 -  the Bureau recognized the feedback from CUNA and others that the rule was not sufficiently tailored and could ultimately cause harm to consumers if implemented. Instead, the Bureau created temporary procedural protections that apply only for borrowers who becomes more than 120 days delinquent after March 1, 2020 and for which the state statute of limitations to file foreclosure will not run before January 1, 2022. For these borrowers, credit unions and other lenders can initiate foreclosure if the property has been abandoned, the borrower has been unresponsive for at least 90 days, or the borrower has already submitted a complete loss mitigation application and been evaluated. These protections only apply to first legal or first notice between the effective date of August 31, 2021 and the sunset of January 1, 2022. The rule also finalized other mortgage servicing protections, including allowing servicers to offer streamlined loan modification based on incomplete loss mitigation applications and providing certain information for borrowers nearing the end of scheduled forbearance.