Your Home After Coronavirus
Are you one of the estimated two million homeowners who are a few months behind on their mortgage due to income loss during the coronavirus? If so, we want to help you understand what you can do with your home after coronavirus.
Thankfully, the Consumer Financial Protection Bureau finalized a proposal that has become law, providing safeguards for the primary residence of these homeowners as long as they became late after March 1, 2020. Government and private forbearance programs will end by September 2021, and many homeowners will be a year or more behind in payments.
Only from September 1, 2021 through year end, mortgage services will be prohibited from making the first notice of foreclosure or filing to initiate a foreclosure if the homeowner and the servicer are in communication and if the borrower has not exhausted loss mitigation options. See 86 Fed. Reg. at 34,883. They have to do one of three procedural safeguards before they can start a foreclosure.
First, the homeowner must have submitted a “complete” loss mitigation application to the servicer; the servicer made a decision based upon the complete application; the homeowner has remained delinquent at all times since that complete application was submitted; the servicer has sent the homeowner a written denial notice; the appeal periods for the written denial notice has expired or been denied; the homeowner has rejected all loss mitigation options offered by the servicer or the homeowner has failed to perform under a loss mitigation option. The foreclosure then can be filed. Be cautious, a streamlined modification is not a complete application. Even if the homeowner accepts a mod and then defaults, a complete application can still be submitted.
For example, Sally is behind on her mortgage payments to Mr. Copper mortgage company. Sally filled out a loss mitigation application and attached proof of her income and expenses. Mr. Copper asked for more information and Sally sent it. When the application is complete, to the satisfaction of Mr. Copper, then Mr. Copper decides if it is going to work with her or not. Mr. Copper offered to put the arrears at the end of the loan and let Sally resume her regular payments. Sally made those payments for six months but lost her job and was unable to make her mortgage payments. She “failed to perform under a loss mitigation option.” Mr. Copper starts foreclosure proceedings.
Second, a homeowner abandons the property. The foreclosure can be filed. Sally stopped making mortgage payments when she had to go to Tennessee to take care of her mother. Perhaps Mr. Copper starts the foreclosure when they do a driveby, noting tall grass and mail stuffed into her mailbox. Sally gets a notice and calls them, telling them that the neighbor kid must not be cutting the lawn and getting her mail but she is just away for five weeks while Mom recuperates from surgery. Sally sends a letter to the judge too and the judge orders that the foreclosure must be dismissed.
Last, the homeowner is unresponsive and the mortgage servicer has made good faith attempts to reach out to her. The foreclosure can be filed. If Mr. Copper has not received any communication from Sally for at least 90 days and all of the following occur:
- Mr. Copper has satisfied its “early intervention live contact attempts” in the 90 days prior to its first notice or filing of foreclosure and, if applicable, in the 10 and 45 days prior to the end of a forbearance period. Did Mr. Copper call Sally or reach out to her under the definition of a “live contact attempt”?
- Mr. Copper sent Sally an early intervention notice letter at least 10 days but no more than 45 days prior to its first notice or filing of foreclosure. That notice asked Sally to call Mr. Cooper, providing a telephone number for a point of contact, and how she also could contact a HUD-certified housing counselor.
- Mr. Copper sent Sally all required notices under Reg. X Section 1024.41, during the 90-day period before it made the first notice or filing. It looks like Mr. Copper has to send a “required notice” if any of the following occurred: in the last 90 days, if Sally submitted an application that Mr. Copper said was incomplete, if Sally defaulted on a streamlined trial modification offer or if a forbearance was offered or extended.
- The borrower’s forbearance, if there was one, ended at least 30 days before the services makes the first notice or filing.
There is much more to these safeguards to help you keep your home after coronavirus than can be explained in this brief article. The more time that a qualified lawyer has to help you, the more options that you have. If we can be of assistance, contact Attorneys Deborah L. Mack, JD/MBA and Attorney Aimee R. Kline of Ohio Financial Lawyers at 419.884.4600.