House Financial Services Committee Chair Maxine Waters, D-Calif., Issued two letters late last week urging federal agencies to provide more lockdown buffers to bridge a gap between the end of the prohibition and the application of new rules regarding the service of loans to come out of forbearance related to the CARES law.
In a letter sent late last week, Waters called on three housing agencies to follow the lead of the Federal Housing Finance Agency do Consumer Financial Protection Bureau rules for foreclosures that begin August 31 in effect earlier for loan products insured or guaranteed by the Federal Housing Administration, the Department of Agriculture and the Department of Veterans Affairs.
The letter also urged the Department of Housing and Urban Development to double the six-month term it offers for more recent forbearance applications on Federal Housing Administration loans. He also called on the HUD to ensure that the protections on some senior equity withdrawal loans are adequate.
In a second letter sent Friday, Waters urged government agencies responsible for overseeing banking and consumer protection – the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the System Board of Governors Federal Reserve, Conference of State Bank Supervisors and the National Credit Union Administration – to enforce foreclosure rules.
“Providing clear advice to mortgage agents and improving supervision and enforcement during this time is essential to ensure that homeowners do not face unnecessary foreclosures during August and before funds are released. Housing counseling and homeowner assistance funds provided through the American Rescue Plan Act don’t reach communities and households, ”Waters wrote.
Mortgages guaranteed by the FHA and VA have had relatively higher abstention rates than GSEs. The FHA / VA rate was 6% versus 2% for GSEs in Black Knight’s latest weekly report. In total, more than 1.86 million borrowers were on hold in the past week, followed by Black Knight, down 71,000 from the previous period.
Seizures usually have fairly long processing times, especially in states where they go through the court system. Between that and the extended forbearance available, forecasts suggest very few foreclosures would start in July alone. The FHA is offering forbearance for up to six months to borrowers who request it between July 1 and September 30. Some previous forbearance requests had longer durations. Withholding expirations should peak this fall.