Millions of homeowners who are behind on their mortgage payments would get added protections from foreclosure through the end of 2021 under a set of rules completed Monday by the Consumer Financial Protection Bureau.
Under the rules, mortgage lenders generally can’t foreclose on a home without first contacting homeowners to see if they qualify for a lower interest rate or some other loan change that makes it easier to repay.
“We want servicers and homeowners to be actively engaged in loss-mitigation throughout the summer and the fall so that we can get as many people as possible to a good outcome,” Diane Thompson, a senior adviser to the agency’s acting director, said on a call with reporters.
If a modification isn’t possible or a homeowner doesn’t respond—or the property is unoccupied—the foreclosure can proceed after the rules go into effect on Aug. 31.
The purpose of the rules, agency officials said, is to ensure that mortgage companies thoroughly process the large number of borrowers expected to exit from temporary pandemic-relief programs that have allowed homeowners to postpone monthly payments until the fall. CFPB officials say they want to prevent any avoidable foreclosures.