WASHINGTON—The Consumer Financial Protection Bureau is proposing additional measures to ensure that homeowners and struggling borrowers are treated fairly by mortgage servicers.
The proposed rule, out for a 90-day comment period, would require 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 proposal 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 in a release. “Today’s proposal would give greater protections to mortgage borrowers.”
In January, 2014, the CFPB instated mortgage servicing rules to 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.
The new proposal 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; and provide more information to borrowers in bankruptcy.
The proposal, as well, would make additional changes to the existing mortgage servicing rules. These changes include providing flexibility for servicers to comply with certain force-placed insurance and periodic statement disclosure requirements. The changes would clarify several early intervention, loss mitigation, information request, and prompt crediting of payments requirements, as well as the small servicer exemption.
The proposal would also exempt servicers from providing periodic statements under certain circumstances when the servicer has charged off the mortgage.
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