In late November, the Consumer Financial Protection Bureau (CFPB) turned its focus toward ensuring that homeowners and borrowers are treated fairly by mortgage servicers. The bureau released a proposal which would provide surviving family members and other homeowners with the same protections as the original borrower. The proposal would require servicers to provide certain protections more than once over the life of the loan, to put in place additional servicing transfer protections, and to take steps to protect borrowers from wrongful foreclosure.
In January of 2014, CFPB put in place a number of common sense rules meant eliminate surprises and runarounds for borrowers in order to ultimately reduce shoddy mortgage servicing practices. These rules provide strong protections for struggling homeowners, especially those facing foreclosure. Servicers are now required to maintain accurate records, give troubled borrowers direct access to servicing personnel, promptly credit payments and correct errors on request.
CFPB’s most recent proposal is meant to ensure that the rules are working as intended. The main goals of the proposal are to:
- Require servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan,
- Expand consumer protections to surviving family members and other homeowners,
- Require servicers to notify borrowers when loss mitigation applications are complete,
- Protect struggling borrowers during servicing transfers,
- Clarify servicers’ obligations to avoid dual-tracking and prevent wrongful foreclosures,
- Clarify when a borrower becomes delinquent, and
- Provide more information to borrowers in bankruptcy.
The proposed rule and disclosures will be open for public comment for 90 days after their publication in the Federal Register.
A copy of the proposed rule, which includes information on how to submit comments, is available at: http://files.consumerfinance.gov/f/201411_cfpb_proposed-rule_mortgage-servicing.pdf