Waters requires extra FHA mortgage foreclosures protections
House Financial Services Committee Chair Maxine Waters, D-California released two letters late last week urging federal agencies to put more buffers against foreclosure to fill a gap between the end of the ban and the enforcement of new rules for to conclude the servicing of the upcoming loans from the forbearance associated with the CARES Act.
In a letter sent late last week, Waters urged three housing companies to follow the lead of the Federal Housing Finance Agency to enforce the Consumer Financial Protection Bureau’s foreclosures on the 31st Administration, Department of Agriculture and Department of Veterans Affairs.
The letter also asked the Department of Housing and Urban Development to double the six-month term for recent Federal Housing Administration deferral loan applications. It also urged HUD to ensure that protection for certain equity withdrawal loans for seniors is adequate.
In a second letter sent on Friday, Waters urged government agencies to oversee banks and consumer protection – the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve Systems, the Conference of State Bank Regulators, and the National Credit Union Administration – to enforce enforcement compliance.
“Providing clear guidance to mortgage servants and improving oversight and enforcement during this period is critical to ensuring homeowners don’t face unnecessary foreclosures in August and before the housing advice and home help funds provided by the American Rescue Plan Act reach communities and households, ”wrote Waters.
Mortgages guaranteed by the FHA and VA had relatively higher forbearance rates than the GSEs. The FHA / VA rate was 6% compared to 2% for the GSEs in Black Knight’s latest weekly report. A total of more than 1.86 million borrowers were indulgent in the last week Black Knight tracked, 71,000 fewer than the previous period.
Foreclosures generally have fairly long processing times, especially in states where they go through the judicial system. Between that and the Extended Forbearance available, predictions have shown that very few foreclosures would be initiated in July alone. The FHA offers a grace period of up to six months to borrowers who request between July 1 and September 30. Some earlier requests for deferral had longer terms. Forbearance spouts are expected to increase this fall.