by Sarah Jawaid, National Housing Conference
The Consumer Financial Protection Bureau released Thursday a final rule to regulate mortgage servicers, and implement consumer protections from the Dodd-Frank law. Many of the changes mirror standards developed for the national mortgage settlement. The new standards include (also see CFPB’s helpful summary):
- Limitations on dual-tracking of loss mitigation and foreclosure proceedings
- Early outreach to borrowers if delinquent on a payment
- Prompt notification of foreclosure alternatives
- Timelines for servicers to meet when contacting and responding to borrowers
- Single application for loss mitigation with prompt and fair review
- No foreclosure sale until all loss mitigation options are exhausted
- No foreclosure sale if a loss mitigation agreement is in place
- Rules for force-placed insurance
- Specific explanation to borrowers for denial of a loss mitigation application
“For many borrowers, dealing with mortgage servicers has meant unwelcome surprises and constantly getting the runaround. In too many cases, it has led to unnecessary foreclosures,” said CFPB Director Richard Cordray in the statement announcing the rules. “Our rules ensure fair treatment for all borrowers and establish strong protections for those struggling to save their homes.” Full text and summary of the rule is available on the CFPB web site.