The Consumer Financial Protection Bureau (CFPB) on Tuesday outlined consumer protection principles to guide mortgage servicers, investors, government housing agencies, and policymakers as they develop new foreclosure relief solutions. The bureau’s action comes as the Department of Treasury’s Home Affordable Modification Program, HAMP, a foreclosure relief program put in place in response to the financial crisis, is nearing its expiration date. The CFPB’s proposed principles are meant to provide guidance in potential options to help prevent avoidable foreclosures.
“We aim to help consumers avoid foreclosures, which upset their personal and financial lives,” said CFPB Director Richard Cordray. “The modification program was put in place to provide alternatives to foreclosure. Our principles will serve as helpful guardrails for servicers, investors, and regulators to consider as we continue to protect consumers who are struggling to pay their mortgages.”
Servicers may provide consumers with ways to prevent foreclosure, also known as “loss mitigation” options, such as forbearance, repayment plans, loan modification, and short sales, according to CFPB.
During the financial crisis, the Department of Treasury created HAMP to provide relief to families at risk of foreclosure. Consumers who could not make their mortgage payments have been able to seek changes through the program to reduce their monthly payment and prevent foreclosure. With the program expiring in January 2017, the industry is beginning to develop new foreclosure relief options.