The Consumer Financial Protection Bureau (CFPB) recently announced that it is improving certain mortgage servicing rules and is expanding foreclosure protections for struggling borrowers and other homeowners. The final rule is pursuant to RESPA, TILA, the FDCPA, and the Dodd-Frank Act.
According to the CFPB, the final rule clarifies, revises, or amends provisions regarding force-placed insurance notices, policies and procedures, early intervention, loss mitigation requirements under Regulation X’s servicing provisions, and prompt crediting and periodic statement requirements under Regulation Z’s servicing provisions.
One of the new rules is to improve the methods mortgage servicers have to communicate with borrowers who are seeking mortgage assistance and avoid foreclosure such as a loan modification, or short sale. For example, the CFPB now requires servicers to let borrowers know when their application for loss mitigation is complete.
This is important because certain protections don’t begin until an application is complete. Servicers are often prohibited from conducting a foreclosure sale while they are in the process of reviewing a complete application.
Mortgage servicers are now required to inform certain borrowers of the protections of the loss mitigation rules more than once during the life of the loan.
The new rules also mandate servicers to furnish statements to these borrowers in certain circumstances, with specific information tailored for bankruptcy, as well as a modified early intervention notice to let them know about loss mitigation options.
The final rule also addresses proper compliance regarding certain servicing requirements when a person is a potential or confirmed successor in interest, is a debtor in bankruptcy, or sends a cease communication request under the Fair Debt Collection Practices Act.
It also makes technical corrections to several provisions of Regulations X and Z. The Bureau is issuing concurrently with this final rule an interpretive rule under the Fair Debt Collection Practices Act relating to servicers’ compliance with certain mortgage servicing rules.
Under Section 1061 of the Dodd-Frank Act, certain “consumer financial protection functions” was transferred to the CFPB that previously was governed by other Federal agencies, including the Board of Governors of the Federal Reserve System (Board). The term “consumer financial protection function” is defined to include “all authority to prescribe rules or issue orders or guidelines pursuant to any Federal consumer financial law, including performing appropriate functions to promulgate and review such rules, orders, and guidelines.”
You can read the full text of the amendments at this link: