Finance Agency Plan to Further Forestall Home Foreclosures Fails to Recognize Economic Realities
COLUMBUS, Ohio, April 7, 2021 /PRNewswire/ -- Distressed asset auctioneer Richard Kruse of Gryphon USA said plans by the Consumer Finance Protection Bureau to delay foreclosures another nine months and create more regulations only builds pressure on consumers and the nation's housing market.
The CFPB this week announced proposed rules meant to encourage lenders and loan servicers to continue working with consumers to avoid foreclosure, pushing potential filings out to January 2022.
"I understand the intent," said Kruse. "But the CFPB is effectively demanding an immediate and unrealistic overhaul of lending, investment, servicing and mortgage insurance industries, not understanding that the end result will be worse with these rules than allowing the legal system work."
Nearly 13 months ago, Congress and the Trump administration agreed to a one-year ban on mortgages insured by U.S. agencies with a March 31, 2021 sunset. Certain evictions also were postponed as the Coronavirus-19 pandemic spread and millions of Americans lost their jobs. In February, the Biden administration through various agencies extended the foreclosure and eviction ban through June 30.
The CFPB, in its April 5 news release, warned that the expected surge of borrowers exiting forbearance in the fall will put mortgage servicers under strain. (https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-mortgage-servicing-changes-to-prevent-wave-of-covid-19-foreclosures/)
While the independent commission tries to frighten Americans about this wave of potential foreclosures, Kruse said the proposed delay would only allow for nonperforming mortgages to be further along in default status, negatively impacting the homeowner once the ban is lifted.
"Consumers have been afforded a year to identify next steps and the administration is now suggesting to add another 6 months to the timeline. What CFPP doesn't seem to grasp is that their proposal will not stop foreclosures," Kruse said. "Call it what you want; kicking the can down the road again, sticking another finger in the dyke or stacking additional pressure behind a cork that must eventually pop."
Kruse added, "The fact remains that throwing these new rules at the problem will not solve homeowners' financial distress; it will only delay it. The proposed changes are unrealistic to implement and will ultimately fail, but the administration gets their hollow victory of being able to say 'well, we tried' while at the same time distressed borrowers get to say 'thanks a lot for that'."
SOURCE Gryphon USA
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