As the economy recovers, businesses reopen and people return to work, pandemic economic relief programs will be winding down, including mortgage forbearance programs.
As of January, more than 2.7 million people were still in the programs to put payments on hold during the pandemic, according to the Consumer Financial Protection Bureau.
The CFPB is warning mortgage servicers to get ready for what it calls a “tidal wave of distressed homeowners” when forbearance starts to expire in June.
Meg Burns with the Housing Policy Council, an industry group, said homeowners are in better shape than they were in the last economic crisis.
“They have more equity in their properties, they are receiving assistance very quickly,” she said. “And I think that we expect to see fewer foreclosures as a result of it.”
Also, the programs to help people who miss payments are better this time around, said Mike Calhoun, who runs the Center for Responsible Lending.
“The good news is that those payments are generally added simply to the end of the loan with no additional fees or interest.”
Calhoun said this CFPB guidance also signals that the agency will take a more active role in consumer protection moving forward.