I have written a number of blog posts about the Consumer Financial Protection Bureau (CFPB). This week, it finalized rules to help protect homeowners from poor service and unexpected fees that are charged by mortgage servicers. The new rules follow release of regulations designed to insure that qualified mortgages (QMs) are, indeed, likely to be repaid. I blogged about this earlier.The latest regulations require that mortgage companies:
- *Provide clear monthly billing statements
- *Warn borrowers before interest rates rise
- *Actively help borrowers avoid foreclosure, including contacting the borrower and providing “information about the amount due required to become current, the risk of failing to do so, written examples of various options that may be available, and information on housing counseling”
- *Promptly credit payments
- *Swiftly correct mistakes in billing
- *Keep better internal records
Much like last week’s Qualified Mortgage regulations, these “new” rules seem like basic common sense. However, the CFPB says the new guidelines are better than older versions because they prevent “dual tracking” – when a lender simultaneously attempts a loan modification and pursues foreclosure – and “provide a fairer and more effective process for troubled borrowers who face the potential loss of their homes.” Servicers will not be permitted to file papers to begin the foreclosure process until a mortgage is more than 120 days past due; previously some servicers started the process at 90 days.
The CFPB says regulations on mortgage servicers are just as important as regulations on mortgage lenders because borrowers cannot “shop around” to pick the best mortgage servicer. This is a VERY good point!!!
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