New Proposed Rules for Mortgage Servicers to Help Consumers
The Consumer Financial Protection Bureau has announced plans to propose a straightforward approach to loan administration which aims to help consumers and financial institutions alike in the management of loan payments. Mortgage servicers, who work for the lender, are not currently held accountable to consumers for unresponsiveness and bad record-keeping. To compound the issue, since the lender chooses the servicer, the lender has little incentive to correct any issues.
The new rules are expected to be proposed in the summer of 2012 for implementation in January 2013.
The goal is to make servicers accountable. If a loan servicer is slow and unresponsive in processing your payments, it can damage your credit rating and even cost you your home through no fault of your own. These new rules will help to correct that potential.
Under the new rules, servicers would be required to: provide regular itemized statements; provide advanced disclosures and alternatives in the case of variable interest rates; ensure adequate fire insurance is maintained on the property; make good faith attempts to contact delinquent homeowners; credit accounts promptly; set reasonable policies and procedures to minimize errors; and provide delinquent or potentially delinquent borrowers with direct access to employees dedicated to helping them.