Mortgage lenders could face penalties if they fail to take action to prevent a spate of foreclosures that threatens to hit the housing market later this year, a US regulator said Thursday.
The warning from the Consumer Financial Protection Bureau is tied to a leniency release that has allowed millions of borrowers to delay their mortgage payments due to the pandemic. To avoid what the office will refer to as "avoidable foreclosures" after the relief expires, mortgage servants should reach out to affected homeowners now for advice on how to modify their loans.
"There is a tidal wave of desperate homeowners who will need help," said Dave Uejio, the CFPB's acting director, in a statement. "Servicers who put families in trouble first have nothing to fear, but we will hold those who harm homeowners and families accountable."
In a separate compliance bulletin released Thursday, the CFPB said companies unable to adequately manage mitigation can expect the office to take enforcement or oversight action.
As of January, more than 2 million borrowers had either postponed their payments or failed to make them for at least three months, the office said. Once the government-approved leniency plans end in September, hundreds of thousands may need assistance to get back on track.