WASHINGTON – The Consumer Financial Protection Bureau has tightened rules on foreclosures in an effort to prevent mass foreclosures coming out of the COVID-19 pandemic.
The rule, which will become effective Aug. 31, 2021, bans foreclosures on residential mortgages—whether the mortgage is federally backed or not—until 2022 unless the company collecting mortgage payments does a full review of the homeowner’s situation and what modification options could help.
The ban, however, will not include tax foreclosures, homeowners association-initiated foreclosures, or hard money lender-initiated foreclosures. It will also not include homes that were delinquent for more than 120 days prior to March 1, 2020.
The rule takes effect a month after the Centers for Disease Control and Prevention's national eviction ban expires on July 31. Last month, the Federal Housing Finance Agency extended the foreclosure and eviction moratoria for Enterprise-backed mortgages through the end of this month.
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