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Wednesday, June 30, 2021

New Florida Laws Go into Effect on July 1

 By Kerry Smith

Three bills from the 2021 final report on the Legislature become effective Thursday, including a new property insurance law and $900M to help the environment.

TALLAHASSEE, Fla. – Florida Realtors® advocated for a number of issues in the 2021 session of the Florida Legislature, including three that were signed by Gov. DeSantis and go into effect on Thursday, July 1.

Property insurance: The first, SB 76, is a comprehensive property insurance bill that implements several measures intended to address rising insurance costs within the state, by generally tightening some issues that can lead to rising insurance costs, including:

  • Limiting some of the things contractors may do in relation to insurance claims for roof damage
  • Limiting the fees attorneys representing claimants may receive
  • Requiring policyholders to file claims within three years of a loss
  • Strengthening Florida Office of Insurance Regulation (OIR) oversight of companies affiliated with Florida property insurers
  • Requiring Florida residential property insurers to file a comprehensive annual report with OIR regarding closed claims
  • Increases the 10% cap on Citizens rate increases by 1% annually beginning in 2022, until the cap reaches 15% in 2026

Environment: As part of the state budget, nearly $900 million will also be available to help the environment on July 1. This year’s fiscal budget includes money for:

  • Everglades restoration: $487 million
  • Springs protection: $50 million
  • Beach projects: $100 million
  • The Wastewater Grant Program: $116 million
  • The Resilient Florida Grant Program: $29 million

The federal American Rescue Plan Act of 2021 passed during the pandemic also includes a total of $1.08 billion in federal funding that has been allocated for several of the environmental programs.

Unlicensed activity: The Florida Legislature also allocated up to $500,000 to be used during the new fiscal year to prevent unlicensed real estate activity.

© 2021 Florida Realtors®

Home Price Increase: The Highest in More than 15 Years

 By Christopher Rugaber

The April Case-Shiller home price report found prices rising at their highest pace since 2005, and the forces pushing prices higher offer “little evidence of abating.”

WASHINGTON (AP) – U.S. home prices soared in April at the fastest pace since 2005 as potential buyers bid up prices on a limited supply of available properties.

The S&P CoreLogic Case-Shiller 20-city home price index, released Tuesday, jumped nearly 15% in April from the previous year. That is up from a 13.4% annual gain in March.

Many Americans have sought more living space since the pandemic began, seeking larger homes in suburbs rather than apartments or smaller homes in cities. Historically low mortgage rates, restrained in part by the Federal Reserve’s low-interest-rate policies, have also spurred demand, just as the large millennial generation ages into a peak home-buying period. The price gains have been so dramatic that home sales have started to slow as more would-be buyers are priced out of the market.

Still, economists said there is little sign that the housing market’s blistering price increases are likely to cool off soon.

“The forces that have propelled home price growth to new highs over the past year remain in place and are offering little evidence of abating,” said Matthew Speakman, an economist at real estate data provider Zillow.

All 20 cities that make up the index reported higher year-over-year price gains in April than the previous month. Five cities – Charlotte, Cleveland, Dallas, Denver, and Seattle – had the largest 12-month price increases on records dating back 30 years.

Even as demand rose during the pandemic, fewer Americans were willing to sell their properties, perhaps reluctant to have waves of potential buyers troop through their homes. That sharply reduced the number of houses available, setting off bidding wars for most properties. Last month, nearly half of homes sold were selling above their asking price, according to realty company Redfin.

In May, the number of available homes ticked up slightly, to 1.23 million. But that was still down 21% compared with a year earlier.

Sales of existing homes have fallen for four straight months, likely because soaring prices have discouraged some would-be buyers. Still, demand is strong enough that a typical home was on the market for just 17 days last month, the National Association of Realtors® said. Nearly 9 of 10 homes were on the market for less than a month.

Phoenix reported the largest price gain in April for the 22nd straight month, according to the Case-Shiller index, with an increase of 22.3% from a year earlier. San Diego followed at 21.6%, followed by Seattle at 20.2%.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Tuesday, June 29, 2021

CFPB Issues Rules to Create Smooth Forbearance Transition

 By Kerry Smith

The consumer bureau’s acting director, Dave Uejio, says the foreclosure-ban end will “drain billions of dollars in wealth from the Black and Hispanic communities.” The rules require lenders to assertively help homeowners stay in their homes and understand their options.

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) finalized amendments to the federal mortgage servicing regulations to reinforce the ongoing economic recovery as the federal foreclosure moratoria are phased out. It also published an Executive Summary of those rules.

Overall, CFPB says it created the rules to help protect mortgage borrowers from unwelcome surprises as they exit forbearance.

According to CFPB, the amendments will support the housing market’s “smooth and orderly transition to post-pandemic operation” by creating temporary safeguards to help ensure that borrowers have time before a foreclosure to explore their options, such as loan modifications and selling homes.

The rules cover loans on principal residences, generally exclude small servicers, and take effect on Aug. 31, 2021.

“As the nation shifts from the COVID-19 emergency to the economic recovery, we cannot be complacent about the dangers we still face,” says CFPB Acting Director Dave Uejio. “An unchecked wave of foreclosures would drain billions of dollars in wealth from the Black and Hispanic communities hardest hit by the pandemic and still recovering from the impact of the Great Recession just over a decade ago. An unchecked wave of foreclosures would also risk destabilizing the housing market for all consumers.”

Uejio says CFPB is “giving homeowners the time and opportunity to make informed decisions.” And it’s giving mortgage servicing firms “the flexibility they need to serve homeowners with dignity,” even while they’re servicing an “unprecedented volume of borrowers.”

Over seven million American homeowners temporarily stopped making monthly mortgage payments through COVID-19 hardship forbearance, about two million are still participating. However, most of the latter are expected to be in forbearance for over a year. CFPB expects about 900,000 homeowners to exit forbearance between now and the end of the year.

The number of homeowners currently in forbearance is greater than the number of at-risk homeowners during the Great Recession. Over 3% of U.S. homeowners with a mortgage are at least four months behind on mortgage payments.

New rules: A smooth and orderly transition

The new rules require servicers to redouble efforts to prevent avoidable foreclosures. The rules will:

  • Give borrowers a “meaningful opportunity” to pursue loss mitigation options. To ensure borrowers can do this, servicers must meet temporary “special procedural safeguards” before initiating foreclosures for certain mortgages through the end of the year.
  • Allow mortgage servicers to help borrowers faster. Servicers can offer streamlined loan modifications to borrowers with COVID-19-related hardships without making borrowers submit all paperwork for every possible option. These streamlined loan modifications cannot increase borrowers’ payments and have other protections built into them.
  • Tell borrowers their options. Servicers must increase outreach to borrowers before initiating foreclosure and tell borrowers key information about their repayment or other options.

Generally, borrowers will have at least three options to bring their mortgages current and avoid foreclosure. Borrowers may:

  • Resume regular mortgage payments. Servicers can move a borrower’s missed payments to the end of the mortgage, commonly called “deferral.”
  • Lower their monthly mortgage payments. Modifications can change the interest rate, principal balance or length of the mortgage.
  • Sell their homes. For homeowners with sufficient equity, a sale may be possible. However, long-term forbearance may have eroded borrowers’ equity.

In some cases, foreclosures can’t be avoided. Under the CFPB’s rule, foreclosures will be able to start if the borrower:

  • Abandoned the property
  • Was more than 120 days behind on their mortgage before March 1, 2020
  • Is more than 120 days behind on their mortgage payments and has not responded to specific required outreach from the mortgage servicer for 90 days
  • Has been evaluated for all options other than foreclosure and there are none

The CFPB offers extensive consumer resources, including information on how to contact HUD-approved housing counselors, online at

© 2021 Florida Realtors®

Thursday, June 24, 2021

NAR: U.S. housing market is short 5.5 million homes


by Alsha Khan - 


The shortage of housing in America is more “dire” than previously expected, according to a new National Association of Realtors (NAR) report. The report, authored by the Rosen Consulting Group, highlights the massive underbuilding gap in the U.S. and the consequences of underinvesting in housing. 

The report asserts that the acute shortage of affordable and available housing is detrimental to the health of the public and the economy. With the findings in the report, NAR calls for a “once-in-a-generation” policy change and urges lawmakers to include housing investments in any infrastructure package. In addition, the organization says policymakers should also “expand access to resources, remove barriers to and incentivize new development and make housing construction an integral part of a national infrastructure strategy.”

In the last 20 years, growth in America’s housing inventory has slowed significantly all over the country, especially in the past decade. NAR report calls this an “underbuilding gap” of 5.5 to 6.8 million housing units since 2001. 

The situation is even more serious in the Miami-Fort Lauderdale-West Palm Beach area, where the underbuilding gap of 67,600 units is one of the highest in the nation among major metropolitan areas.

“There is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream,” said Lawrence Yun, NAR’s chief economist, in a press release about the report. “It’s clear from the findings of this report and from the conditions we’ve observed in the market over the past few years that we’ll need to do something dramatic to close this gap.”

NAR President Charlie Oppler noted in the press release that adequate housing construction in the upcoming decade would add an estimated 2.8 million jobs to the American workforce and an expected $50 billion in new, nationwide tax revenue. 

NAR hopes that the report will put pressure on the federal government to provide additional public funding and policy incentives to the housing industry that would benefit the country’s economy and help close the housing gap for lower-income households, households of color, and millennials. 

Friday, June 18, 2021

Mortgage Rates Drop Again, Falling to Average 2.93%

Inflation hasn’t pushed mortgage rates higher because the market believes it’s only temporary, says Freddie Mac chief economist.

MCLEAN, Va. – This week’s average mortgage rates fell a bit more, to 2.93% from last week’s 2.96% for a 30-year, fixed-rate loan, according to Freddie Mac’s weekly update.

In times of rising inflation, mortgage rates begin to rise. However, that hasn’t happened this time, at least so far.

“Mortgage rates continue to drift down as markets concur with the view that inflation increases are temporary,” says Sam Khater, Freddie Mac’s chief economist.

“While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices,” Khater adds. “With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller’s market.”

Mortgage rates for the week of June 17, 2021

  • The 30-year fixed-rate mortgage averaged 2.93% with an average 0.7 point for the week, down from last week’s 2.96%. A year ago, the 30-year FRM averaged 3.13%.
  • The 15-year fixed-rate mortgage averaged 2.24% with an average 0.6 point, up slightly from last week’s 2.23%. A year ago, the 15-year FRM averaged 2.58%.
  • The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.52% with an average 0.3 point, down from last week’s 2.55%. A year ago, it averaged 3.09%.

© 2021 Florida Realtors® 

Florida-Owned Citizens Insurance Tops 600,000 Policies

 The state wants to keep numbers down because it could leave taxpayers on the hook after a major storm hits. Still, the CEO expects 750K policies by the end of the year.

TALLAHASSEE, Fla. – State-backed Citizens Property Insurance Corp. had nearly 610,000 policies as of May 31, according to updated information posted on its website. Citizens – the “insurer of last resort” – aims to cover only Florida homeowners who can’t get coverage elsewhere, but it generally covers less than a private insurer, and taxpayers may be charged if a hurricane causes major damage to the state.

Florida lawmakers try to minimize the number of homeowners under Citizens’ umbrella for that reason, but it’s not easy. Gov. Ron DeSantis recently signed a bill (SB 76) designed to help bolster private insurers and allow larger rate increases for Citizens customers. However, it will take time to see how well it works.

On May 31, Citizens had 609,805 policies – an increase from 589,041 policies on April 30.

With private insurers dropping customers and seeking double-digit rate increases, Citizens’ policy count has surged in 2020 and 2021. As an example, it had 463,247 policies on May 31, 2020, or nearly 32% growth during the past year, according to the website.

President and CEO Barry Gilway has said Citizens, which was created as an insurer of last resort, likely will have about 750,000 policies by the end of this year.

Source: News Service of Florida

Tuesday, June 15, 2021

U.S. Market: 8 Out of 10 Homes Sold at or Above List Price In the past six months, 82% of listings sold for list price or higher, plus 1 in 10 had no showings before contract signing, and 1 in 4 had 5 showings or less.

NEW YORK – With a low supply of homes for sale, sellers find sales happen quickly and fetch higher and higher offers. In the past six months, 82% of owners who listed their home accepted offers at list price or above, according to a new survey of about 1,600 homeowners conducted by

What’s more, homes are selling faster too:

25% of home sellers said they had five or fewer showings before finding a buyer

26% had between six and 10 showings before selling

Nearly 10% say they had no in-person showings at all and still sold their home due in part to the uptick in virtual tours that have been increased during the pandemic.

In April, almost 9 out of 10 homes sold were on the market for less than a month, according to National Association of Realtors®.

Twenty-seven percent of sellers surveyed say they accepted offers $10,000 or even $20,000 higher than their requested sales price, according to the seller survey.

Sellers expect more than just the best price from offers lately. Many sellers in the survey said say they refused to consider offers with any contingencies or other strings-attached: 28% required all-cash payments, no contingencies, and 30 days or less to close, and 14% opted to sell their home “as is.”

Source: “How Are Sellers in the Current Market REALLY Doing?” (June 8, 2021)

Wednesday, June 9, 2021

When Will Buyers Again See Foreclosures Listed for Sale?

 By Laurence E. Platt

The question is simple – the answer not so much. CFPB (Consumer Financial Protection Bureau) wants to wait until 2022. A request for rule comments, however, received a range of suggestions. And as a practical matter, can lenders handle thousands of foreclosures all at once?

WASHINGTON – As COVID-19 infections continue to decline in the United States, Americans are slowly coming out of isolation and returning to a sense of normalcy – a return to on-site work and school, a return to indoor dining, a return to travel, a return to in-person visits with friends and loved ones, and a return to sports arenas, ballparks, and arts venues, among other types of returns.

But a return to normalcy is not a positive for all. A case in point: There are many home loan mortgagors for whom forbearance from their regularly scheduled monthly mortgage payments will soon come to end, along with an end to the moratorium on initiations and continuations of foreclosure.

Will a return to normalcy for delinquent mortgagors necessarily mean a rapid return to home foreclosures? That is the question that the Consumer Financial Protection Bureau (CFPB) is trying to answer in the negative in its proposed amendments to the default servicing regulations that are part of Regulation X under the Real Estate Settlement Procedures Act (RESPA). The comment period on the proposed amendments (the Proposal) closed on May 10, 2021, with a proposed effective date of August 31, 2021.

This laudable public policy goal, however, raises interesting questions about the CFPB’s legal authority to impose additional temporary limitations on a loan holder’s right to pursue foreclosure against delinquent mortgagors. This Legal Update synthesizes certain of the comments to the Proposal regarding an attempt to increase the time before a loan holder or servicer may initiate a foreclosure.


The context is well known to those in the residential mortgage industry and related stakeholders. It has been over a year since Congress enacted the CARES Act, which, among lots of other provisions, gave mortgagors during the “covered period” the right to receive forbearance for up to a year on their regularly scheduled home mortgage payments if they attested to a financial hardship directly or indirectly caused by COVID-19.

The law also imposed a moratorium on home foreclosures and evictions during the “covered period.”

The CARES Act only applied to loans that were sold to Fannie Mae or Freddie Mac, insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs or the Department of Agriculture – labeled “federally backed mortgage loans” – but various states enacted somewhat similar provisions.

While the CARES Act failed to define the term “covered period,” the relevant federal entities, either at their own initiative or as a result of a subsequent executive order by President Biden, extended the time limits on forbearance and the foreclosure/eviction moratoria. But the time limits are rapidly approaching.

As the CFPB noted in its Proposal, “… the foreclosure moratoria that apply to most mortgages are scheduled to end in late June 2021. In addition, most borrowers with loans in forbearance programs as of the publication of this proposed rule are expected to reach the maximum term of 18 months in forbearance available for federally backed mortgage loans between September and November of this year and will likely be required to exit their forbearance program at that time.”

And that is just for federally backed mortgage loans, although the extension of forbearance from 12 months to 18 months is limited to certain borrowers. Forbearance and foreclosure relief voluntarily provided by private investors or required under applicable state law also will soon sunset or may already have ended.

Unless they have been making regularly scheduled monthly mortgage payments notwithstanding their award of forbearance, mortgagors generally are delinquent for the number of months they were in forbearance, and even more if they were delinquent before the commencement of forbearance because they had not paid the amounts due under the terms of their loan documents.

This means that a graduation from forbearance likely results in a seriously delinquent borrower who may not be eligible for home retention loss mitigation options and, as a result, risks the loss of the borrower’s home.

Existing Regulation X

The existing Regulation X prohibits a precipitous push to foreclosure. Unlike the CARES Act, the applicability of Regulation X is not limited to “federally backed mortgage loans.” It does not require a residential mortgage loan holder or servicer to offer a borrower any loss mitigation at all or any particular types or forms of loss mitigation. But it requires servicers of residential mortgage loans to follow detailed procedures to ensure that the borrower is informed by the servicer of available loss mitigation options, given the opportunity to apply and be timely considered for such options, appeal the denial of any loan modification option, and not be subject to a dual track of foreclosure while the borrower’s application for loss mitigation is being evaluated.

To afford sufficient time for a borrower to be evaluated for available alternatives to foreclosure, Regulation X presently prohibits a servicer, including a small servicer, from making the first notice or filing required under applicable law for any judicial or non-judicial foreclosure process unless:

  1. the mortgage loan is more than 120 days delinquent or
  2. the foreclosure is based on a borrower’s violation of a due-on-sale clause or
  3. the servicer is joining the foreclosure of a superior or subordinate lienholder

This is referred to as the required “pre-foreclosure review.” Of course, borrowers exiting a COVID-19 forbearance may be well over 120-days delinquent. In other words, the pre-foreclosure review period under existing regulations already would have expired.

Proposed amendment to Regulation X relating to special pre-foreclosure review

As an overlay or supplement to the existing requirement for a 120-day pre-foreclosure review, the Proposal calls for a temporary COVID-19 emergency special pre-foreclosure review period that would generally prohibit servicers from making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process until after Dec. 31, 2021.

The CFPB asked commentators to consider two potential exceptions. The first exception would permit a servicer to make the first notice or filing before Dec. 31, 2021, if the servicer has completed a loss mitigation review of the borrower and the borrower is not eligible for any non-foreclosure option. The second exception would permit a servicer to make the first notice or filing before Dec. 31, 2021, if the servicer has made certain efforts to contact the borrower and the borrower has not responded to the servicer’s outreach.

In addition, while not an explicit exemption, because the Proposal only applies to loans secured by the borrower’s principal residence, loans secured by abandoned properties may not be subject to this extension of the pre-foreclosure review period, depending on the facts and applicable state law.

Moreover, unlike the existing pre-foreclosure review period under Regulation X, “small servicers” would be exempt from the proposed special pre-foreclosure review period.

Public comments relating to the special pre-foreclosure review proposal

The relatively short duration of the extension of the pre-foreclosure review, coupled with the potential exceptions render the Proposal, are a relatively modest step to forestall foreclosures, and the public comments the CFPB received in response to the Proposal reflect that conclusion.

The comments generally break down into four categories:

  1. Is the special pre-foreclosure review period practically necessary or counterproductive?
  2. If adopted, should the special pre-foreclosure review period be based on a specific calendar date, Dec. 31, 2021, for all borrowers or instead on a specific number of days following the end of forbearance for any particular borrower?
  3. Should the exceptions be expanded and clarified?
  4. Does the CFPB have the legal authority to impose the special pre-foreclosure review period?

Is the special pre-foreclosure review period necessary or counterproductive?

Perhaps because of the potential availability of broad exceptions to the special pre-foreclosure review period, public comments focused less on the imposition of such an extended review period and more on what it should look like.

The Housing Policy Council (HPC) and the Bank Policy Institute (BPI), however, together expressed concern in their comment letter “… that the brief time when the review period will be effective suggests that the need for this regulatory change is limited and the proposal is unnecessarily complicated.” They expressed their belief that the existing protections afforded borrowers under the loss mitigation provisions of Regulation X, along with standard state foreclosure proceedings, are sufficient to achieve the CFPB’s general objective to provide every borrower with ample opportunity to avoid foreclosure when a borrower’s circumstances would permit such avoidance.

The Urban Institute (UI) in its comment letter makes a more practical point – namely, that the existing procedures for evaluating mortgagors for alternatives to foreclosure, whether by regulation or investor policies, “… require multiple rounds of communication and borrower notice and take several weeks or months.” This could take the foreclosure decision beyond Dec. 31, 2021. And for those borrowers who were delinquent pre-pandemic and already found to be ineligible for loss mitigation alternatives to foreclosure, additional time is unlikely to change the result and “[d]elaying the inevitable would serve neither the borrower nor the neighborhood in which the home is located.”

Moreover, UI highlights the fact that the current economic environment is different than the economic environment during the last housing crisis that featured a crashing real estate market with a substantial number of underwater loans. In light of the substantial home equity experienced by most borrowers resulting from strong home appreciation, “[m]ost uncurable loans, whether agency or non-agency, will be resolved via a market sale.”

The foreclosure route, as a result, will be much more limited. According to UI, “[T]his would render the proposed prohibition largely redundant-and counterproductive-as properties would be held back from the market at a time when supply is tight.”

The HPC/BPI comment letter identifies another counterproductive result of the proposed special pre-foreclosure review period. As the CFPB acknowledged in the preamble to its Proposal, the letter notes the notification of the foreclosure process “is the impetus to engage with the servicer” for some borrowers and “[d]elaying that notice may exacerbate this problem.”

If adopted, should the special pre-foreclosure review period be based on a specific calendar date or a specific number of days following the end of forbearance?

While the UI comment letter asserts that a special pre-foreclosure review period ending at the end of this calendar year does not offer protection for those whose forbearance ends after that date, it did not suggest either an extension of that deadline or the replacement with a fixed number of days.

Consumer advocates see the same problem and, not surprisingly, propose a different solution. The Center for Responsible Lending (CRL) and National Community Stabilization Trust (NCST) in their joint comment letter opine that “… a rule that pauses foreclosures until Dec. 31 would do nothing for those whose forbearance runs through or beyond that cutoff and who also face a risk of an avoidable home loss.”

They prefer a 120-day grace period at the end of a borrower’s forbearance period to a “one-size-fits-all pre-foreclosure review period.” Aside from wanting to protect borrowers who do not come out of forbearance until next year, the CRL/NCST letter expresses concern that “… servicer capacity to engage in effective loss mitigation will be strained with a large number of foreclosures filed at the beginning of 2022.”

The National Consumer Law Center (NCLC) articulates the same position as the CRL and NCST in even in more detail. It supports a 120-day grace period at the end of a borrower’s forbearance period instead of a Dec. 31, 2021, deadline. Its long list of objections to the December 31 proposal includes the “immense pressures on the entire foreclosure system if hundreds of thousands of foreclosures begin in January 2022,” the lack of protection for those whose forbearance ends after Dec. 31, 2021, and the arguable incentives to servicers to begin foreclosures before the new rule takes effect, given that the effective date will not occur for several more months.

The HPC/BPI letter takes a different tack. While it does not support a special pre-foreclosure review period in the first place, it recommends a shorter 60-day period if the CFPB elects to establish such a period.

Should the exceptions to the special pre-foreclosure period be expanded and clarified?

As noted above, the Proposal asks commenters to consider two possible exemptions to the special pre-foreclosure review period, although the Proposal does not include explicit language for the potential exceptions.

The first exception would permit a servicer to make the first foreclosure notice or filing before Dec. 31, 2021, if the servicer has completed a loss mitigation review of the borrower and the borrower is not eligible for any non-foreclosure option. The second exception would permit a servicer to make the first foreclosure notice or filing before Dec. 31, 2021, if the servicer has made certain efforts to contact the borrower and the borrower has not responded to the servicer’s outreach.

Not surprisingly, the major lender trade associations support both exceptions, albeit with clarification.

The possible exemption for completed loss mitigation reviews raises the question of when the review must have been completed. For example, the CFPB questioned whether the exemption only should be available for reviews after the effective date of the final rule. Both the Mortgage Bankers Association (MBA) and the American Bankers Association (ABA) in their respective comment letters advocate that the exemption should apply to loss mitigation evaluations completed prior to the effective date of the final rule, while the HPC comment letter provides that the exemption should include evaluations made within the six months prior to the effective date to account for the time frame (after March 1, 2021) when the various COVID-19 loss mitigation government programs currently available were put into effect.

The MBA and ABA letters also recommend that this exemption be expanded to include borrowers who have declined the proposed loss mitigation options or have failed to perform on the selected loss mitigation option.

The NCLC rejects the exemption for previously completed loss mitigation reviews, arguing that “… evidence from the Great Recession and from government note sales, as well as from current borrower experiences, demonstrates that loss mitigation reviews are often incomplete or inaccurate.” It believes that borrowers may not realize that they previously have been denied a loss mitigation option and mistakenly believe that they are safe until the end of the calendar year.

Perhaps more importantly, the NCLC comment letter agrees with the concern expressed by the CFPB in the Proposal that prior evaluations may have been completed prior to the borrower’s recovery from financial hardship and thus do not account for the borrower’s present financial circumstances.

The possible exemption based on unresponsive borrowers generated many requests for specificity regarding the scope of the “reasonable diligence” that the servicer must take before concluding a borrower is unresponsive. The HPC supports the CFPB’s recommendation to use the definition of “reasonable diligence” in the Home Affordable Modification Program (HAMP) and further recommends that the written notice requirements may be satisfied by using notices already required under Regulation X.

The CRL/NCST also support the incorporation of HAMP’s definition of “reasonable diligence,” but they proposed to condition the availability of this exemption on the adoption of another component of the CFPB’s proposal – namely, that the servicer, after exercising reasonable diligence in trying to reach the borrower, sends a “streamline payment modification offer or solicitation” to the borrower with a deadline for a response.

But the CFPB’s Proposal simply would permit a servicer to offer a “streamline payment modification” without a complete loss mitigation application. The CRL/NCST approach would convert a voluntary process available to servicers into a condition precedent to the availability of the exemption from the special pre-foreclosure review based on an unresponsive borrower. The CRL takes the same approach, claiming that an exemption based solely on the inability of the servicer to establish contact with the borrower “… would incentivize less rigorous, ineffective contact attempts.”

Two additional exemptions from the special pre-foreclosure review should be added according to some of the comment letters. First, some of the trade associations representing servicers want to exclude borrowers whose loans were delinquent prior to the onset of COVID-19. For example, the HPC/BPI letter requests that the CFPB clarify that the foreclosure review period does not apply to foreclosures that were initiated prior to the final rule’s effective date, regardless of whether state law requires refilling or restarting the foreclosure.

This is not really a new exemption, given that the requirement for a special pre-foreclosure review applies to the first notice or filing required by applicable law; by its terms, this requirement would not apply to loans where the servicer made this filing prior to the commencement of the foreclosure moratorium, but the trades want to be sure that a required refiling would not trigger the special pre-foreclosure review.

Interestingly, neither the CRL/NCST nor the NCLC letters comment on this issue. The ABA calls for an explicit exemption for borrowers who were 120-days delinquent on March 1, 2020, and, as of September 1, 2021, remain more than 120-days delinquent. Rather than seeking a new exemption or clarification of the Proposal, the MBA would include within the “unresponsive borrower” exemption borrowers who were seriously delinquent (over 120 days) prior to March 1, 2020, and who have not requested assistance or responded to servicer contact attempts made in accordance with Regulation X.

An explicit exemption for abandoned properties also is a request under some of the comment letters.

As noted above, the Proposal only applies to loans secured by the borrower’s principal residence, which based on the facts and circumstances may result in the exclusion of abandoned properties. For example, the HPC/BPI letter asks the CFPB to “explicitly and clearly exempt abandoned properties from the special pre-foreclosure review period”; the ABA and MBA letters make similar requests.

This is an issue on which consumer advocates and servicers seem to be aligned. The CRL/NCST letter highlights the concern that “[V]acant or abandoned homes that do not go through foreclosure risk blighting the community.” It wants a clear definition for abandoned properties to “… encourage servicers to foreclose on them and help avoid blight.”

Both the HPC/BPI and CRL/NCST letters ask the CFPB to consider adopting the definition of “abandonment” contained in the Uniform Home Foreclosure Procedures Act drafted by the National Conference of Commissions on Uniform State Law, unless state law otherwise defines the term.

Does the CFPB have the legal authority to impose a special pre-foreclosure review period?

When Congress enacted the CARES Act and imposed a home loan foreclosure/eviction moratorium and granted borrowers a statutory right to home loan forbearance, questions abounded whether the actions could be overturned as an unlawful “taking” under the Fifth Amendment of the US Constitution. This Amendment provides: “Nor shall private property be taken for public use, without just compensation.”

But over the years, courts have distinguished between a so called “per se taking” and a “regulatory taking,” accounting for the public interest asserted to justify the taking in the latter case. While some may want to attack the CFPB’s proposed special pre-foreclosure review as an unconstitutional taking, none of the major trades did so. The more likely question is whether the CFPB has sufficient delegation of authority from Congress to require servicers to delay the initial filing of a foreclosure.

A good example of challenging the delegation of congressional authority to undertake regulatory action arose under the nationwide eviction memorandum ordered by The Centers for Disease Control and Prevention (CDC) on Sept. 4, 2020. Concerned that eviction of tenants would exacerbate the spread of COVID-19, the CDC ordered a temporary prohibition on residential evictions. It believed that it had the authority to issue this order based on its statutory delegation of authority to “make and enforce such regulations as in his [the Secretary] judgment are necessary to prevent the introduction, transmission, or spread of communicable diseases …” On May 5, 2021, the United States District Court for the District of Columbia held that the CDC did not have the statutory authority to order the temporary residential eviction, finding that this order was invalid but staying its opinion pending appeal.

What about the CFPB? What is its statutory authority to require a delay in filing foreclosures under RESPA regardless of whether a loan is a “federally-backed mortgage loan” covered by the CARES Act?

Actually, this question about the CFPB’s statutory authority predates the Proposal and harkens back to the original issuance of the CFPB’s default servicing regulations in 2013. The answer requires a review of the provisions of the Dodd-Frank Act (the DFA) enacted by Congress on July 21, 2010.

The provisions in the voluminous DFA pertaining to residential mortgage servicing are limited. The DFA amended RESPA to clarify a servicer’s obligations with respect to “qualified written requests,” escrow accounts and force-placed insurance. It amended the Truth-in-Lending Act to clarify obligations with respect to periodic statements, crediting of payments, and payoff statements.

That’s it! Virtually none of the extensive default servicing regulations contained in Regulation X reflect specific provisions in the DFA.

There is one potentially broad delegation of authority under the DFA. Section 1463 of the DFA provides that “A servicer of a federally related mortgage loan shall not … fail to comply with any other obligation found by the Bureau of Consumer Financial Regulation, by regulation, to be appropriate to carry out the consumer protection purposes of this Act.”

This statutory provision purports to be very broad, but is limited by the consumer protection purposes of RESPA. The comment letter from the Structured Finance Association argues that the CFPB simply does not have the statutory authority to impose the special pre-foreclosure review. It notes, for example, “RESPA’s statement of congressional purpose does not speak to servicing at all. And the subjects to which Congress regulates servicers under Section 6 are limited.” It further notes that “there is nothing from the context of RESPA’s enactment to suggest that Congress delegated authority to the Bureau to prohibit foreclosures.”

Of course, under this argument, one could argue that the CFPB did not have statutory authority to require the pre-foreclosure review period in the original servicing amendments to Regulation X following the enactment of DFA, much less the additional time period occasioned by the proposed special pre-foreclosure review period. Arguably, both or neither should be valid, although perhaps there is a line in the sand that cannot be crossed before the CFPB’s authority to regulate foreclosure is deemed insufficient.

None of the other major trade associations raised this statutory delegation of authority issue in their comment letters to the Proposal. One reason may be the relatively modest scope and duration of the proposed special pre-foreclosure review, as well as their strong desire to work collaboratively with the CFPB to ease delinquent borrowers’ transition from forbearance. But this issue may gain added industry support if the comments of the consumer advocates to expand the special pre-foreclosure review find favor with the CFPB.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

Copyright © The Mayer Brown Practices; © Mondaq Ltd, 2021. All rights reserved.

Tuesday, June 8, 2021

Florida's Attorney General Issues Real Estate Scam Warning

 By Kerry Smith

Stressed buyers and renters desperate for a home can make rash decisions – and scammers know that. Escrow wire-fraud scams can destroy a buyer’s dreams only moments before a closing, but Fla. A.G. Moody also focuses on rental, loan-flipping and foreclosure relief scams.

TALLAHASSEE, Fla. – Florida is in the midst of a home buying frenzy, and Florida Attorney General Ashley Moody issued a warning for Floridians to remain vigilant against real estate scams. Stressed buyers or renters can be fertile territory for scammers because offers that seem “too good to be true” aren’t. Consumers should understand how to safely navigate the process.

“Buying a home is often the largest and most important purchase a person makes, so it’s important to ensure scammers don’t take advantage of the situation to turn a dream purchase into a financial nightmare,” says Moody.

Common real estate scams include escrow wire fraud, rental scams, loan-flipping scams and foreclosure relief scams.

Escrow wire fraud

In escrow wire fraud, scammers usually pose as representatives from a title or escrow company and contact a new homebuyer with instructions for escrow money transfer. If the consumer follows the scammer’s instructions and wires in the escrow money, the scammers can withdraw that money and disappear.

To avoid this trap, consumers should always check the original documents received from the lender directly rather than relying on just an email, and they should call the phone numbers listed on the original document to confirm the validity of the wiring instructions. A big red flag: Sometimes an email requests an escrow change that contradicts instructions already received. Always confirm an escrow account number with the bank or lender before wiring any money.

Rental scams

Scammers post fake rental ads on Craigslist or other sites, often using real photos and/or addresses taken from a legitimate real estate listing or rental offer. They change only the contact information.

Once a consumer expresses interest in the rental, the scammers ask for either an upfront cash payment to rent the property or put down a deposit. Consumers should be suspicious of anyone who asks for a cash deposit to see a property, and ensure the person is the real property owner before negotiating rental terms. A big red flag: Scammers will often say they’re out of town and suggest that renters drive by to look at the property. They often “scrape” information from an actual listing because the home will then have a “for rent” or “for sale” sign in the yard.

Loan-flipping scams

Loan-flipping scams occur when a predatory lender persuades a homeowner to refinance their mortgage repeatedly, often borrowing more money each time. The fraudster charges high fees with each transaction, and eventually the homeowner gets stuck with higher loan payments they can’t afford. Homeowners can avoid this scam by being wary of lender solicitations, and to deal only directly with known banks or lenders.

Foreclosure relief scams

In a foreclosure relief scam, criminals dupe homeowners in pre-foreclosure with a promise to save the owner’s home – providing the owner pays a large upfront fee. As time passes, these homeowners often find themselves in worse financial shape and living in a house that the bank has still foreclosed. Consumers should work directly with their loan servicer to modify an existing loan, request forbearance or make another arrangement.

Moving scams

In an earlier Consumer Alert, Moody warned Florida consumers about moving scams, which often involve lower-priced services that become more expensive after the fact. To avoid common moving scams, consumers should:

  • Never sign blank or incomplete documents or contracts
  • Obtain moving estimates and quotes from the company in writing and make sure estimates are binding
  • Determine whether the movers will perform the move alone or if the company will subcontract the service to another carrier

Real estate and moving scams in Florida can be reported to the Attorney General’s office by calling 1(866) 9NO-SCAM or filing a complaint online at

© 2021 Florida Realtors®

Landlords Ask Supreme Court to End the Eviction Moratorium

 One judge ruled to end the eviction moratorium, but an appeals court refused to make any changes right away. Landlords now want the U.S. Supreme Court to weigh in.

WASHINGTON – A lawyer representing landlords and housing providers asked the Supreme Court on Thursday to halt the Biden administration’s moratorium on evictions, which was put into place because of the coronavirus pandemic.

The request comes after a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit on Wednesday declined to stop the moratorium while a case challenging its constitutionality is pending.

“Landlords have been losing over $13 billion every month under the moratorium, and the total effect of the CDC’s overreach may reach up to $200 billion if it remains in effect for a year,” states the landlords’ request to Chief Justice John G. Roberts Jr.

The landlords won in the district court in the District of Columbia, but the judge paused the ruling while it was appealed, leaving the Centers for Disease Control and Prevention’s (CDC) eviction moratorium intact – for now.

The appeals court affirmed that move this week, allowing the lawsuit to proceed but kept landlords from evicting non-paying tenants.

“The moratorium was tailored to the necessity that prompted it,” wrote the three-judge panel. “[The Department of Health and Human Services] carefully targeted it to the subset of evictions it determined to be necessary to curb the spread of the deadly and quickly spreading COVID-19 pandemic.”

The landlords hope the Supreme Court will reverse that move.

“The stay order cannot stand. As both the Sixth Circuit and the district court here recognized, Congress never gave the CDC the staggering amount of power it now claims,” the landlord’s court filing states. The moratorium bans landlords from evicting tenants while the order is enforced, so landlords are unable to remove a renter who can’t pay rent.

The CDC first issued the moratorium in September under former President Trump, but the government has continued to renew it, even after vaccines have been widely distributed.

Lawyers for the landlords said they fear that the government will renew the moratorium again instead of letting it lapse at the end of June as scheduled.

Lawsuits challenging the government’s eviction moratorium are piling up, as property owners, including struggling mom-and-pop operators, ask the courts why they are expected to take a financial hit while non-paying tenants are protected by the moratoriums.

Some district courts have delivered wins for the landlords, while others have ruled for the government. Recently, the 6th U.S. Circuit Court of Appeals invalidated the government’s moratorium but did not issue a nationwide injunction.

© Copyright 2021 News World Communications Inc.

Monday, June 7, 2021

Report: Home Loans Backed by PMI Increased 53% in 2020

 By Kerry Smith

The association representing private mortgage insurers (PMI) says the average Fla. buyer has a credit score of 739, a $58K annual income and buys a median $310K home. In 2020, 55% of Fla. first-time buyers relied on PMI to make down payments of less than 20%.

WASHINGTON – As home costs go up, more buyers need private mortgage insurance (PMI) because they make less than a 20% down payment. As a result, more buyers need PMI to secure a home of their own.

According to U.S. Mortgage Insurers’ (USMI) annual report, which includes a breakdown specific to Florida, it would take a Florida firefighter 28 years to save for a 20% home down payment ($46,073 annual salary), a middle school teacher 24 years ($56,113 salary), a registered nurse 19 years ($72,204 salary) and a veterinarian 15 years ($97,150 salary).

Florida borrowers with PMI in 2020

  • Over 40% of mortgage borrowers
  • 130,800 homeowners in Florida
  • $276,232: the average loan amount of those with PMI
  • 55%: Percentage of PMI users who were first-time buyers
  • 746: Average credit score for PMI borrowers

Florida, Texas, California, Illinois and Michigan were the top five states for mortgage financing with PMI.

“Access to low down payment loans was more important than ever this past year as many homebuyers weighed other economic concerns during the pandemic,” says Lindsey Johnson, president of USMI. “Mortgage insurance levels the playing field and provides lower- and middle-income households with access to mortgage credit.” Johnson says the industry served more than 2 million borrowers last year, a “new milestone for our industry.”

Report findings

  • It would take an average 21 years for a household earning the national median income of $68,703 to save for a 20% down payment (plus closing costs), for a $299,900 single-family home, the national median sales price.
  • The wait time is seven years with a 5% down payment mortgage with PMI.
  • In 2020, PMI allowed over 2 million more owners a chance to own their own home
  • Nearly 60% of PMI purchase mortgages went to first-time homebuyers, and more than 40% had annual incomes below $75,000.
  • The average loan amount purchased or refinanced with PMI was $289,482.
  • PMI supported $600 billion in 2020 mortgage originations – about 65% for new purchases and 35% for refinanced loans.
  • By year end, about $1.3 trillion in outstanding mortgages had active PMI coverage.

© 2021 Florida Realtors®