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Another Tidal Wave of Home Foreclosures is Projected in Fall of 2021–Mortgage Lenders Are Preparing!

by in Bankruptcy

04/05/2021

Another Tidal Wave of Home Foreclosures is Projected in Fall of 2021–Mortgage Servicers Are Preparing!

Earlier this week, the Consumer Financial Protection Bureau (CFPB) warned mortgage services to take all necessary steps now to prevent a wave of avoidable foreclosures this fall. The projected surge in home foreclosures is based on millions of homeowners who are currently in forbearance and who will need help from their servicers when the pandemic-related federal emergency mortgage protections expire this summer and fall.

As of January 2021, approximately 2.7 million borrowers remained in such programs, with 2.1 million borrowers in forbearance and at least 90 days delinquent on their mortgage payments. Industry data suggest that nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many of them a year or more behind in their mortgage payments. The CFPB advises mortgage servicers to ramp up capacity to reach out and respond to the large numbers of homeowners likely to need loss mitigation assistance. Both homeowners and servicers will need to plan now.

CFPB will keep focus on several factors to see how well mortgage servicers are doing.

  • Being proactive. Servicers should contact borrowers in forbearance before the end of the forbearance period so they have time to apply for help.
  • Working with borrowers. Servicers should work to ensure borrowers have all necessary information and should help borrowers in obtaining documents and other information needed to evaluate the borrowers for assistance.
  • Addressing language access. The CFPB will look carefully at how servicers manage communications with borrowers with limited English proficiency and maintain compliance with the Equal Credit Opportunity Act and other laws.
  • Evaluating income fairly. Where servicers use income in determining eligibility for loss mitigation options, servicers should evaluate borrowers’ income from public assistance, child-support, alimony or other sources in accordance with the Equal Credit Opportunity Act’s anti-discrimination protections.
  • Handling inquiries promptly. The CFPB will closely examine servicer conduct where hold times are longer than industry averages.
  • Preventing avoidable foreclosures. The CFPB will expect servicers to comply with foreclosure restrictions in Regulation X and other federal and state restrictions in order to ensure that all homeowners have an opportunity to save their homes before foreclosure is initiated.

Contact an experienced Bankruptcy attorney to discuss your options if facing a foreclosure.

If you are an Arizona homeowner who is either in forbearance or behind 90 days or more on your mortgage, it is important for you to know your rights under Arizona Foreclosure Law and know your protections under the Arizona Anti-Deficiency Statute. Protections under a Chapter 7 or a Chapter 13 Bankruptcy may also be right for you.

Speak with an experienced Bankruptcy attorney to understand your rights and protections at Patel Law PLC, Arizona Bankruptcy Attorneys at: 602.266.2169. We offer free initial consultations for all Bankruptcy matters.