For many homeowners with a mortgage in Maryland and across the nation, the ongoing societal challenges that started in early 2020 have wreaked havoc on their personal finances, their employment, led to major medical expenses and put them behind on their mortgage payments. While the government implemented safety nets to help those who were in trouble and would otherwise have been in jeopardy of foreclosure, that will not last forever. This is true even though the crisis has not completely abated. As mortgage forbearance is winding down, people who are still not out of the woods financially should be cognizant of new protections and their legal options.
No plans to ban foreclosures after July 31st
The Consumer Financial Protection Bureau (CFPB) does not intend to extend the foreclosure ban past its latest end date of July 31. However, it is implementing safeguards that must be done by the lenders before pursuing a foreclosure. If a debtor is delinquent in the mortgage for more than 120 days, there will first be a loss mitigation application filed with the loan service for review. There will be alternatives to avoid foreclosure and foreclosure can only start after they have been exhausted.
Next, there must be a confirmation from the loan servicer that a property is abandoned, then it can be foreclosed upon. Finally, the loan servicer must make a good faith attempt to get in touch with the borrower prior to starting a foreclosure. Only when the person is 120 days in arrears and does not reply for more than 90 days can the foreclosure process proceed. These protections will go into effect beginning on Aug. 31 and end at the new year. Borrowers must know that if the CFPB’s new rules are followed and completed, then the loan servicer has no obstacles to foreclosing.
Being prepared for a foreclosure attempt is key to combating and avoiding it
Even as people were given extensions and time to get their finances in order as they struggled, it is imperative to have a plan when banks and other lenders try to move forward with a foreclosure on a property. Perhaps the loan can be modified. Bankruptcy could be a strategy to retain the property. There could be ways to go to court and fight back against the attempt to foreclose. Before doing anything drastic or making the mistake of waiting and hoping for more government assistance, it is beneficial to be proactive and consider ways to avoid the foreclosure immediately. Having experienced assistance can present ideas and a plan to address these and other financial issues.