Democrats: Senate must step up homeowner protections in next relief package

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Democratic lawmakers are calling for critical consumer protections for all homeowners, after an inquiry of 11 mortgage servicers revealed significant disparities in implementation of coronavirus relief measures.

In a letter obtained exclusively by Yahoo Money, Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), and Robert Menendez (D-NJ) urged leaders Chuck Schumer (D-NY) and Mitch McConnell (R-KY) to step up protections to help Americans across the country amid the pandemic.

Read more: Coronavirus: Here’s what to do if you can’t pay your mortgage

“This inquiry revealed that while mortgage servicers are taking steps to comply with homeowner protection provisions guaranteed in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), there remain gaps in their implementation, as well as issues that were unaddressed by the CARES Act, that could result in significant harm to homeowners,” the senators stated.

In April, after the CARES Act was passed, Warren , Brown, Menendez, along with several others, had sent letters to the top mortgage servicers to ask how exactly the firms were carrying out the legislation.

Lender responses varied quite significantly in some cases.

Actions taken to help homeowners were not uniformly applied across lenders, from providing information to homeowners to forbearance to privately-held loans, according to the inquiry responses from lenders seen by Yahoo Money.

The CARES Act included payment deferrals up to a year for coronavirus-related hardships, but applied only to government-backed mortgages.

For instance, while banks such as Wells Fargo provided 360 days for those with Freddie Mac and Fannie Mae home loans, those with private mortgages only received up to 90 days of forbearance. The protections are set to expire next week.

“On March 9th, 2020, Wells Fargo implemented a 90-day forbearance relief, regardless of investor, for any borrower requesting assistance due to COVID-19,” said Michael DeVito, executive vice president of home lending at Wells Fargo. “Wells Fargo also secured temporary foreclosure sale and eviction suspensions for all loans, including the ones not protected by the CARES Act.”

Foreclosure protections
The inquiry also highlighted how servicers were delayed in their responses to halt foreclosure activities.

The CARES Act had forbade lenders of federal backed mortgages from initiating “any judicial or non-judicial foreclosure process, move for a foreclosure judgement or order of sale, or execute a foreclosure related eviction or foreclosure sale,” for 60 days starting March 18.

But letters reveal that some servicers and mortgage lenders — such as Mr. Cooper — didn’t halt foreclosure activity related to FHA, VA and USDA backed loans until almost a week later on March 24.