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Feds propose prohibiting US foreclosures until 2022

Feds propose prohibiting US foreclosures until 2022
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The Consumer Financial Protection Bureau (CFPB) on Monday proposed banning foreclosures until 2022 as many families risk facing losing their homes as federal protections during the pandemic expire.

"We've seen a shocking increase in housing insecurity, with millions living precariously and months behind on mortgages or rent," acting CFPB Director Dave Uejio said during a news conference, CBS News reports.

The CFPB’s proposal involves preventing foreclosure by providing a pre-foreclosure review period for those behind on their mortgage that would restrict loan servicers from starting foreclosures until 2022.

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The number of homeowners behind on their mortgage has doubled since the pandemic began, CBS News reports. Of the 3 million behind on their mortgage payments, around 2.1 million are at least 90 days behind.

The CFPB proposed setting up “guardrails” to protect loan servicers if mortgage borrowers default on their loans, including allowing servicers to provide homeowners with ways to lower their mortgage payments.

"We will do everything in our power to ensure servicers work with struggling families to find solutions that prevent avoidable foreclosures," Uejio added.

Comments on the proposal must be made by May 10 and the rule could go into effect beginning in September.

The Centers for Disease Control and Prevention last week extended the nationwide eviction moratorium through June 30 as more than 10 million Americans currently face housing insecurity. The moratorium does not cancel unpaid rent, with renters still required to pay off their debts once the moratorium is lifted.

The Biden administration is currently working to distribute almost $40 billion to households that need assistance covering rent and utilities.