CFPB Released New Rules on Foreclosures
The Consumer Financial Protection Bureau (CFPB) released new guidelines for mortgage servicers on January 17, 2013, that set out to establish new, strong protections for struggling homeowners facing foreclosure. The CFPB is trying to help protect homeowners who may be facing foreclosure with these new rules that take effect in January 2014. The new rules were required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which directed the CFPB to implement reforms for the mortgage servicing industry.
Mortgage servicers are responsible for collecting payments from mortgage borrowers on behalf of loan owners. They also typically handle customer service, escrow accounts, collections, loan modifications, and foreclosures. Generally, borrowers have no say in choosing their mortgage servicers. Lenders frequently sell loans to investors after the mortgage deal is signed, and the investors choose the services not the consumer.
Some of the CFPB’s new guidelines from the rule are:
- Mortgage servicers are prohibited from foreclosing on a homeowner who is seeking loan modifications. Services will be unable to file a foreclosure notice until a homeowner is at least 120 days behind on a mortgage payment.
- A foreclosure sale on the home will be prohibited until alternatives are considered. Services will be required to give homeowners adequate time to accept an alternative to foreclosure before going ahead with a foreclosure sale. Servicers must respond to loan modification requests from homeowners who apply for a loan modification at least 37 days prior to a foreclosure auction.
- When a homeowner has missed two consecutive payments, servicers are required to send a written notice of foreclosure alternative examples to the homeowner, such as deferred payments and loan modifications.
- Servicers must be easily accessible to the homeowners for assistance.
- Services will be required to publish more clear mortgage statements, which includes mortgage payments broken down by principal, interest, fees, and escrow as well as includes the amount and due date of the next payment.
- Servicers must notify homeowners early about any interest rate changes to their mortgage payments.
- Services will be required to credit a homeowners account on the date a payment arrives.
If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713