New proposal would ban most foreclosures until 2022.
The Consumer Financial Protection Bureau (CFPB) is proposing what would effectively be a ban on most residential foreclosures through the end of 2021.
Last year, the federal government suspended foreclosures and evictions for mortgages insured by the Federal Housing Administration as the coronavirus pandemic left millions of people unemployed. Fannie Mae and Freddie Mac did the same for borrowers in single-family homes with loans backed by the two mortgage buyers. The initiatives offered borrowers relief for up to one year and suspended late charges and penalties.
The CFPB estimated that there were roughly 3 million homeowners behind on their mortgages as of February, 2.1 million of which were at least 90 days delinquent. The agency said the number of seriously delinquent mortgages is on track to decline to 1.9 million by September.
"We've seen a shocking increase in housing insecurity, with millions living precariously and months behind on mortgages or rent," acting CFPB Director Dave Uejio said in a news conference.
Families whose homes are foreclosed often end up suffering long-term financial distress, including housing instability. Foreclosures can also hurt the value of neighboring properties, according to the CFPB.