Financial Regulator Proposes Anti-Foreclosure Rules

The government’s consumer financial watchdog agency is attempting to make it a bit harder for a bank to take your house after you miss payments.

The Consumer Financial Protection Bureau (CFPB) proposed rules Wednesday intended to make it easier for homeowners facing foreclosure to get financial help from lenders and keep their homes.

The rules, based on temporary regulations implemented during the pandemic, are intended to get more financially distressed homeowners into repayment plans after a financial setback.

“When struggling homeowners can get the help they need without unnecessary obstacles, it is better for borrowers, servicers, and the economy as a whole,” Bureau Director Rohit Chopra said in a press release. “The CFPB’s proposal would reduce avoidable foreclosures and make the mortgage market more resilient during future crises.”

Foreclosures Less Frequent, But Still Relevant

Foreclosures are relatively rare by historic standards, with only about 100,000 properties in some stage of foreclosure nationwide in the first quarter, slightly fewer than just before the pandemic according to real estate data provider ATTOM Data. However, they’ve been much more common in the past during times of financial crisis, peaking at more than 900,000 at the height of the Great Recession.

The new rules would require companies that service mortgages to work with homeowners to offer assistance before starting foreclosure proceedings. They would also limit fees, and require lenders to tell borrowers about their options in language tailored to their specific situations, and in the language the borrower speaks.

The rules would apply to lenders with more than 5,000 customers, bureau officials said on a conference call with reporters. There is no timeline yet for when, once finalized, they might go into effect.