CFPB Issues New Rules to Curb Mortgage Foreclosure Abuses
Thursday, January 17, 2013
Norma Garcia, senior attorney and manager of the financial services program of Consumers Union, the policy and advocacy arm of Consumer Reports, said, “Widespread abuses by mortgage servicers have made the foreclosure crisis even worse for millions of American families. These rules set new, national standards to help make sure borrowers are treated fairly and have a better chance of getting a loan modification.”
The CFPB rules provide protections for struggling borrowers, such as requirements for a fair-review process to ensure all foreclosure alternatives are considered to help them keep their homes. The rules seek to bring greater transparency and simplicity to the mortgage service process to help consumers avoid runarounds, delays, and surprise charges.
The rules also put some restrictions on a practice known as dual tracking, where the mortgage servicer is moving forward with a foreclosure on one track, while working with the borrower to avoid foreclosure on a separate track. Under the new rules, servicers cannot start a foreclosure if you have an application pending for a loan modification, or before you are 120 days delinquent on the loan. However, if the foreclosure has started, it can continue, short of the servicer seeking a foreclosure judgment, order of sale, or conducting a foreclosure sale.
Garcia said, “While we’re glad to see some curbs on dual tracking, we need to go further and put a hard stop on all foreclosure proceedings when the homeowners are making a good-faith effort to save their homes.” Garcia noted that this hard stop is currently provided to California residents under the California Homeowners’ Bill of Rights, which was signed into law in June 2012.
A summary of the CFPB rules is available online at: http://files.consumerfinance.gov/f/201301_cfpb_servicing-rules_summary.pdf
Contact: David Butler, 202-462-6262 or Michael McCauley,415-902-9537 (cell) or 415-431-6747, ext 126 (office)