PUB. 11 2021-2022 Issue 2

coloradobankers.org 16 New CFPB Rule Offers Flexibility with Foreclosures By Sarah J. Auchterlonie Brownstein Hyatt Farber Schreck T oday, just over two million homeowners are in COVID-19 hardship foreclosure forbearance. The Consumer Financial Protection Bureau (CFPB) recently stated that over 3% of all borrowers are now four months or more behind on their mortgages, which is the usual point when a foreclosure may be initiated. Not even during the worst of the 2009 financial crisis have so many borrowers been so far behind. In response, the CFPB issued a temporary rule under the Real Estate Settlement Procedures Act and Regulation X (RESPA), effective that offers opportunities for investors and servicers to avoid foreclosures and provide better outcomes for themselves and the communities they serve by allowing evaluations of loss mitigation options based on incomplete applications. Moratoriums are lifting, but when? When precisely foreclosures may resume remains uncertain, but the general consensus is “end of summer.” The Coronavirus Aid, Relief and Economic Security Act (CARES Act), Section 4022, allows borrowers with federally backed single-family mortgage loans (HUD/FHA, VA, USDA, Fannie Mae and Freddie Mac loans) to seek forbearance for up to 180 days, which “shall be extended for an additional period of up to 180 days at the request of the borrower.” Loans backed by HUD/FHA, USDA, or VA set the deadline for requesting an initial forbearance to Sept. 30, 2021. Fannie Mae and Freddie Mac are extending the moratoriums on single-family foreclosures and real estate-owned evictions until July 31, 2021. These