The consumer protection authority takes action against mortgage service providers who do not help the struggling homeowners

Andrew Harrer | Bloomberg | Getty Images

The Consumer Financial Protection Bureau warns mortgage servicers that they are expected to support the surge in homeowners in the pandemic and are considering options other than foreclosure.

“Responsible servicers should prepare now,” said Dave Uejio, acting director of the CFPB, in a statement. “There is no time to waste and no excuse for inaction.”

If the state foreclosure moratoriums expire in late June, mortgage servants should prepare for a flurry of homeowners seeking help, according to the CFPB.

In particular, the consumer agency says it will be careful about how well all service providers work with borrowers and prevent avoidable foreclosures.

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The bulletin is a welcome turnaround for the Trump administration, said Mitria Wilson-Spotser, director of housing policy for the Consumer Federation of America.

“All of these guidelines applied in the past to federal service providers,” said Wilson-Spotser. “The CFPB announcement is the first attempt to address the private market.” Around a third, or 14.5 million, mortgages in the US are privately owned and not federally secured.

What it means for struggling homeowners

In short, it means that the CFPB expects mortgage servants to help you stay in your home.

What should this help look like?

For one, your servicer should give you all possible options besides foreclosure, including forbearance or reduced monthly payments, said Alys Cohen, an attorney with the National Consumer Law Center.

If you’d prefer to learn your options in a language other than English, you should be able to request it. If any of these are withheld from you, experts recommend filing a complaint with the CFPB.

In addition to the consumer authority guidelines, many other relief measures have been adopted for people struggling to pay their mortgage amid the pandemic.

The Biden government has announced additional leniency options for homeowners with government-secured mortgages. Some people can pause their payments for up to 18 months.

If you expect your ability to make your monthly mortgage payments to be compromised beyond your grace period, you can ask your lender for a payment reduction, Cohen said.

Although a lower monthly payment can mean a longer loan term and more interest, many people can stay in their homes with this option. (If you are following this path, you’ll want to find out how your insurance and tax payments will affect you.)

The latest stimulus package, passed by Congress, also includes a $ 10 billion pot to help homeowners who are lagging behind. This money can be used for your mortgage, homeowners association fees, property taxes, or utilities.

The states still have to set up programs for the payment of the funds. In the meantime, experts recommend that you call your local housing association, your representatives, or the local 211/311 lines in your area to see how you can get in line for the money.

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