CFPB: What Happens When Eviction/Foreclosure Bans End?

By Kerry Smith

Over 11M U.S. families are behind on rent or house payments, and landlords are struggling. CFPB study: 9% of renters and 28% of manufactured-home residents owe money.

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) – a federal agency focused on consumer security – issued a report, Housing insecurity and the COVID-19 pandemic, that warns of widespread evictions and foreclosures once federal state, and local pandemic protections come to an end if there are no additional public or private actions.

CFPB found over 11 million families behind on rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent.

Homeowners alone owe an estimated $90 billion-plus in missed payments. The last time that many families were behind on their mortgages was during the Great Recession.

“We have very little time to prevent millions of families from losing their homes to eviction and foreclosure,” says CFPB Acting Director Dave Uejio. “We know small landlords are struggling too, with many dipping into savings or using credit cards to make it through the pandemic. We want everyone – homeowners and renters, landlords, and mortgage servicers – to have the tools they need now to avoid unnecessary evictions and foreclosures.”

CFPB says in a release that the federal government is going to great lengths to protect homeowners and renters. Recent actions by the Federal Housing Finance Agency (FHFA), the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture prohibit lenders from foreclosing on most mortgages until June 30, 2021. After that date, families who cannot resume making regular payments will need to make an agreement with their lender to avoid foreclosure. Residential eviction protections for renters are currently extended through March 31, 2021, and it’s unclear if that could be extended.

According to the CFPB report:

• Black and Hispanic families are more than twice as likely to report being behind on housing payments than white families.

• While mortgage forbearance – the option to pause or reduce payments temporarily – has dropped foreclosure rates to historic lows, 2.1 million homeowners are more than 90 days behind on payments and are likely to experience severe financial hardship when payments resume. Of these families, an estimated 263,000 families are seriously behind and not in forbearance.

• 9% of renters, who do not have the same protections or options as homeowners, say they’re likely to be evicted. Black and Hispanic households are more likely to report being at risk.

• 28% of manufactured home residents reported being behind on their housing payments compared to 12% of single-family home residents, and 18% of residents in small-to-mid-sized multi-unit buildings.

A CFPB blog offers further discussion on housing insecurity and the need for aggressive action.

© 2021 Florida Realtors® Reprinted with permission.

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