CFPB Proposes Expanded Foreclosure Protections for Struggling Homeowners
The Consumer Financial Protection Bureau (CFPB) has proposed additional measures to ensure that homeowners and struggling borrowers are treated fairly by mortgage servicers.
The proposed measures would require mortgage servicers to provide certain borrowers with foreclosure 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 a wrongful foreclosure sale. The new rules would also help ensure that surviving family members and others who inherit or receive property have the same protections under the CFPB's mortgage servicing rules as the original borrower.
"The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon," said CFPB Director Richard Cordray. "Today's proposal would give greater protections to mortgage borrowers."
Mortgage servicers are responsible for collecting payments from the mortgage borrower and forwarding those payments to the owner of the loan. They typically handle customer service, collections, loan modifications, and foreclosures. To address shoddy mortgage servicing practices, the CFPB put in place common-sense rules designed to eliminate surprises and runarounds for homeowners. The rules, which went into effect on January 10, 2014, require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly credit payments, and correct errors on request. The rules also include strong protections for struggling homeowners, including those facing foreclosure.
Among other things, the proposed rules would:
- 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
- Provide more information to borrowers in bankruptcy
Further details about the proposal can be found here. The proposed rules and disclosures will be open for public comment for 90 days after their publication in the Federal Register.
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