Many families in the United States face the threat of foreclosure due to financial difficulties related to the COVID-19 pandemic. Fortunately, most of these families have been able to avoid losing their homes thanks to the moratorium on foreclosures that was put in place in March of 2020. This moratorium has been extended several times, and while it was scheduled to expire on June 30, 2021, it has been extended once again. Homeowners may be able to make use of provisions that will allow them to maintain ownership of their homes.
Foreclosure Relief for Federally-Backed Mortgages
The federal foreclosure moratorium has been extended through July 31, 2021. This moratorium applies to homes financed through USDA Single-Family Housing Direct and Guaranteed loans, as well as single-family mortgages backed by Fannie Mae and Freddie Mac.
In addition to this extension, the Consumer Financial Protection Bureau (CFPB) has implemented a new rule that will provide protections for homeowners facing foreclosure while also offering options for financial relief that will allow them to resume mortgage payments and continue owning their homes. This rule will go into effect on August 31, 2021, and it will last until January 1, 2022. This will ensure that homeowners will have protections during foreclosure proceedings that take place after a borrower is delinquent on mortgage payments by at least 120 days.
Under the CFPB’s rule, lenders will only be able to pursue foreclosures in the following circumstances:
Completion of a loss mitigation application – A borrower must be allowed the opportunity to pursue loss mitigation that will allow them to address any delinquent mortgage payments. In these cases, a lender may only pursue foreclosure if a borrower has remained delinquent after submitting an application. Before foreclosure proceedings can begin, the lender must confirm that the borrower does not qualify for any forms of loss mitigation, the borrower has exhausted all appeals available to them, or the borrower rejected loss mitigation options offered to them or failed to meet their requirements under a loss mitigation agreement.
Unresponsive borrower – If a lender has not received any communication from a borrower within 90 days before the date of foreclosure, they may proceed with the foreclosure process. In these cases, a lender must meet certain requirements involving the attempt to initiate live contact with the borrower, as well as providing required notices of impending foreclosure proceedings.
Abandoned property – A lender may initiate foreclosure if a property is considered to be abandoned under the applicable state or local laws.
Contact Our Libertyville Foreclosure Defense Attorneys
At Newland & Newland, LLP, we can help you take action to prevent the foreclosure of your home, including helping you negotiate loan modifications that will allow you to become current on the payments owed. To get legal help and determine your best options, contact our Lake Forest foreclosure prevention lawyers at 847-549-0000 and schedule a complimentary consultation.