State of Emergency: Housing Insecurity and Aggressive Action


Below is a blog by Dave Uejio of CFPB. He addresses the housing insecurity and aggressive action that is needed by him and his team.

The CFPB released our first analysis of the impacts of the COVID-19 pandemic on housing. The good news is that actions taken by both the public and private sectors have prevented many families from losing their homes during this crisis. However, legal protections expire in the months ahead. Over 11 million families — nearly 10 percent of U.S. households — are at risk of eviction and foreclosure.

Put simply: We have very little time to prevent millions of families from losing their homes.

It’s common sense that safe, affordable, and stable housing provides the foundation for people’s well-being, financial and otherwise. As well as stable homes mean stable neighborhoods and communities. When people lose their homes, their lives, health, and finances are all disrupted. Understandably, even the threat of losing a family’s home can force tough financial decisions. Including skipping payments on food, medicine, and heat to keep a roof over their head.

We also know that many, particularly in Black and Hispanic communities, have still not recovered from the last financial crisis more than a decade ago. Those same communities are again bearing a disproportionate financial and health burden during the pandemic, through no fault of their own.

Addressing Housing Insecurity

I am deeply concerned that a mass wave of evictions and foreclosures will turn millions of families out on the streets. Such an event will not only be a humanitarian and public health disaster but will have repercussions throughout the housing sector and our economy at large.

Created in the aftermath of the 2007-08 housing crisis, the CFPB is uniquely equipped to address the current looming housing crisis. When we can use our authority to keep people in their homes, we will. Where we can coordinate public and private efforts to save homes, we will. How we can prevent the weight of this crisis from falling upon communities? Communities who are already struggling — whether they are Black, Hispanic, Native, rural, or lower-income — we will.

And in those unfortunate instances where families can no longer stay in their homes, we will do everything we can to ensure that people are treated with dignity. Families can preserve as much of their equity as possible. Everyone can make a smooth transition to safe, secure, and affordable housing.

While the CFPB is planting itself firmly on the side of homeowners and renters. We also know mortgage servicers and landlords are also working to keep people in their homes. The lenders we’ve spoken to understand that the chaos of the last housing crisis wasn’t good for their bottom line, either.

Most mortgage servicers are working hard to engage with the record number of homeowners in forbearance and the many other homeowners struggling to make payments. And many landlords have dipped into their savings or run up credit card debt to cover expenses during the pandemic.

We all need to work together to respond to and recover from the pandemic. All of us will benefit from a solution that keeps people in their homes during this crisis. At the same time, ensuring a smooth path forward for everyone when life and our economy return to normal.

I’ve instructed our teams to take the following steps:

Aggressive Action: Protect homeowners from unnecessary foreclosure and loss of wealth

I am directing our policy teams to consider all of the CFPB’s available tools to preserve people’s homes and prevent unnecessary foreclosure. We’re continuing to work closely with our federal agency partners, including the U.S. Departments of Housing and Urban Development, Agriculture, and Veterans Affairs and the Federal Housing Finance Agency (FHFA), on measures to ensure homeowners receive the assistance they need to avoid unnecessary foreclosures.

We want families to keep their homes where that makes sense. If it does not make sense, families have a chance to explore other options that let them preserve as much of their investment as possible.

Where, unfortunately, families are no longer able to maintain homeownership, I’m directing our teams to work toward an orderly, humane, and equitable outcome for families. Families need time to sell their homes, find and secure alternate and safe housing, and pack up and move.

No family should be forced through foreclosure without a chance to explore options, including the opportunity to sell their home for fair market value. Many homeowners have accumulated wealth and equity in their homes. Making sure families have a chance to recover and grow their investment is significant.

This is doubly true for Black and Hispanic families. They are among those most likely to bear the brunt of the pandemic now and have suffered the most significant loss of wealth and homeownership in the last financial crisis.

Make sure homeowners and renters have the tools they need now

We know that homeowners and renters can struggle to understand their options and sometimes don’t know whom to trust. In close collaboration with our federal agency partners, the CFPB provides homeowners and renters with the resources they need. This includes understanding their rights and protections, making them aware of scams, and helping them learn how best to request forbearance or mortgage relief.

We know that many people haven’t requested the relief they may be eligible for. For example, roughly 263,000 families are at least 90 days behind on their mortgage and not in forbearance. The CFPB will engage with homeowners to help them know they have options. Including sharing information with our most vulnerable consumers and communities. We will continue to share updates as we expand our work in this area.

Continue our work to understand the causes and cures of the housing insecurity crisis.

This report sets the stage for more work by the CFPB to develop options to head off a national foreclosure and eviction crisis.

I’ve directed our research teams to redouble their efforts to track. They monitor delinquencies, foreclosures, and evictions to understand what’s happening across U.S. households. We’re looking at our data and data from other sources. This data helps to gain as complete a picture of the current crisis quickly as possible to drive our actions.

We need to know more about homeowners and communities to help them overcome the inevitable financial impacts of a crisis of this magnitude. In contrast, there are significant differences in the last mortgage crisis, including a more stable mortgage market and substantial homeowner equity. We don’t know if the most vulnerable communities have sufficient equity to buffer them from the consequences of extended forbearances and job loss. Despite all of this data, we need to know more.

Moreover, the scale of housing insecurity among renters and homeowners presents new risks to families and their communities. Cascading foreclosures in a neighborhood can bring down housing values, shrinking equity. As a result, families impacted hardest by this crisis may not be able to find adequate alternate and safe housing. Even if they can sell their homes without losses.

CFPB is determined to use every tool at our disposal. We are committed to mitigating the risk presented by this historic degree of housing insecurity. We will be working hard to understand these interlocking risks. At the same time, there is still time to avoid full-on catastrophe.

Talk to us. We’re listening.

While today’s report summarizes what we know about the pandemic’s impact on housing. We need to know more to help develop on-time solutions. Through this challenge, I invite you to engage with us. If you’re having trouble getting in touch with your mortgage servicer, submit a complaint through the CFPB.

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