Search

Blog

CFPB Proposes New Foreclosure Rules

by devteam November 22nd, 2014 | Share

The Consumer Financial Protection Bureau (CFPB) has proposedrnsome new measures affecting the way servicers handle mortgages in variousrnstages of default.  The changes willrnrequire servicers to:</p<ul type="disc"

  • Provide certain borrowers withrn foreclosure protections more than once over the life of the loan.  Currently a borrower is given certain protections such as thern right to be evaluated under the CFPB’s options to avoid foreclosure, onlyrn once during the life of the loan, even if they suffer separate financialrn hardships years apart. The proposal would require that servicers providern those protections for borrowers who have brought their loans current sincern the last loss mitigation application. </li
  • Put in place additional servicing transfer protections. Thern proposal clarifies that a transferee servicer must generally comply withrn the loss mitigation requirements within the same timeframes that appliedrn to the transferor servicer. </li
  • Expand consumer protections</b to surviving family members and other homeowners.  Under current CFPB rules, if a borrower dies the servicer must promptly identify andrn communicate with family members or others with a legal interest in thern home.  The proposal expands thern circumstances in which consumers would be considered such successors inrn interest such as when a property is transferred after a divorce, legalrn separation, through a family trust, between spouses, from a parent to arn child or when a borrower who is a joint tenant dies. The proposal alsorn ensures that those successors generally receive the same protections asrn the original borrower. </li
  • Clarify servicers’rn obligations to avoid dual-tracking and prevent wrongful foreclosures.  In some cases servicers are not observingrn the current rule which prohibits them from proceedingrn to foreclosure if they receive a complete loss mitigation application fromrn a borrower more than 37 days prior to a scheduled sale.  CFPB isrn proposing to clarify what steps servicers and foreclosure counsel mustrn take to protect borrowers from a wrongful foreclosure sale and thatrn servicers who do not act appropriately must dismiss a pending foreclosurern action.  </li
  • Clarify when a borrowerrn becomes delinquent:  The proposal clarifies that, for purposesrn of the servicing rules, delinquency begins on the day a borrower fails torn make a periodic payment but if the borrower makes up a missed paymentrn which is applied to the oldest outstanding periodic payment, the date ofrn delinquency advances. </li</ul

    The changes also require servicers to notify</bborrowers when their loss mitigation applications are complete so thatrnborrowers know the status of the applications and the key foreclosurernprotections provided and to provide specific information to some borrowers inrnbankruptcy.  The proposal would also makernchanges to the mortgage servicing rules such as providing flexibility forrnservicers to comply with certain force-placed insurance and periodic statementrndisclosure requirements. The changes would clarify several early intervention,rnloss mitigation, information request, and prompt crediting of paymentsrnrequirements, as well as the small servicer exemption. Further, the proposalrnwould exempt servicers from providing periodic statements under certain circumstancesrnwhen the servicer has charged off the mortgage. </p

    CFPB said that thernproposal reflects the continued consultation with consumer advocacy groups,rnindustry representatives and other stakeholders which has been ongoing sincernits mortgage servicing rules took effect. rnThe proposedrnrule will be open for public comment for 90 days after its publication in thernFederal Register.

    All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

    • About the Author

    devteam

    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

    See all blogs
    Share

    Comments

    Leave a Comment

    Leave a Reply

    Latest Articles

    Real Estate Investors Skip Paying Loans While Raising Billions

    By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

    Late-Stage Delinquencies are Surging

    Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

    Published by the Federal Reserve Bank of San Francisco

    It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...