New Mortgage Protections Take Effect January 2014

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
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Consumer Financial Protection Bureau releases new guidelines for servicers and homeowners in 2014.

Strong Protections for Struggling Borrowers

The CFPB’s mortgage servicing rules ensure that borrowers in trouble get a fair process to avoid foreclosure. Borrowers shouldn’t have to worry about mortgage servicers cutting corners or losing applications for relief. They should be told about their options and given time to apply and be considered for loan modifications and other alternatives. Most of all, they shouldn’t be surprised by the start of a foreclosure proceeding until they have had time to explore all available options. If they act diligently to seek alternatives, they should not face a foreclosure sale before their applications have been evaluated. The new protections for struggling borrowers include:

Restricted Dual-Tracking: Under the CFPB’s new rules, dual-tracking – when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure – is restricted. Servicers cannot start a foreclosure proceeding if a borrower has already submitted a complete application for a loan modification or other alternative to foreclosure, and that application is still pending review. To give borrowers reasonable time to submit such applications, servicers cannot make the first notice or filing required for the foreclosure process until a mortgage loan account is more than 120 days delinquent.

Notification of Foreclosure Alternatives: Servicers must let borrowers know about their “loss mitigation options†to retain their home after borrowers have missed two consecutive payments. They must provide them a written notice that includes examples of options that might be available to them as alternatives to foreclosure and instructions for how to obtain more information.

Direct and Ongoing Access to Servicing Personnel: Servicers must have policies and procedures in place to provide delinquent borrowers with direct, easy, ongoing access to employees responsible for helping them. These personnel are responsible for alerting borrowers to any missing information on their applications, telling borrowers about the status of any loss mitigation application, and making sure documents get to the right servicing personnel for processing.

Fair Review Process: The servicer must consider all foreclosure alternatives available from the mortgage owners or investors – those with decision-making power over the loan – to help the borrower retain the home. These options can range from deferment of payments to loan modifications. And servicers can no longer steer borrowers to those options that are most financially favorable for the servicer.

No Foreclosure Sale Until All Other Alternatives Considered: Servicers must consider and respond to a borrower’s application for a loan modification if it arrives at least 37 days before a scheduled foreclosure sale. If the servicer offers an alternative to foreclosure, they must give the borrower time to accept the offer before moving for foreclosure judgment or conducting a foreclosure sale. Servicers cannot foreclose on a property if the borrower and servicer have come to a loss mitigation agreement, unless the borrower fails to perform under that agreement.
No More Surprises

Clear Monthly Mortgage Statements: Servicers must provide regular statements which include: the amount and due date of the next payment; a breakdown of payments by principal, interest, fees, and escrow; and recent transaction activity.

Early Warning Before Interest Rate Adjusts: Servicers must provide a disclosure before the first time the interest rate adjusts for most adjustable-rate mortgages. And they must provide disclosures before interest rate adjustments that result in a different payment amount.

Options for Avoiding Costly “Force-Placed†Insurance: Servicers typically must make sure borrowers maintain property insurance and if the borrower does not, the servicer generally has the right to purchase it. The CFPB’s rules ensure consumers will not be surprised by this insurance, which often can be more expensive than the insurance borrowers buy on their own. The rules say servicers must provide more transparency in this process, including advance notice and pricing information before charging consumers. Servicers must also have a reasonable basis for concluding that a borrower lacks such insurance before purchasing a new policy. If servicers buy the insurance but receive evidence that it was not needed, they must terminate it within fifteen days and refund the premiums.
No Runarounds

Payments Promptly Credited: Servicers must credit a consumer’s account the date a payment is received. If the servicer places partial payments in a “suspense account,†once the amount in such an account equals a full payment, the servicer must credit it to the borrower’s account.

Prompt Response to Requests for Payoff Balances: Servicers must generally provide a response to consumer requests for the payoff balances of their mortgage loans within seven business days of receiving a written request.

Errors Corrected and Information Provided Quickly: Servicers must generally acknowledge receipt of written notices from consumers regarding certain errors or requesting information about their mortgage loans. Generally, within 30 days, the servicer must: correct the error and provide the information requested; conduct a reasonable investigation and inform the borrower why the error did not occur; or inform the borrower that the information requested is unavailable.

Maintain Accurate and Accessible Documents and Information: Servicers must store borrower information in a way that allows it to be easily accessible. Servicers must also have policies and procedures in place to ensure that they can provide timely and accurate information to borrowers, investors, and in any foreclosure proceeding, the courts.
 

Jeffrey L. Shurtliff

LoanSafe Member
Dec 4, 2010
3,806
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63
This is great. The CFPB has alot of power and the GOP is trying to not let Obama appoint Richard Cordray to head it. Richard Cordray if you remember was the first AG to take action against lending institutions of his state. His suit survived a MTD. This is the best thing to happen to borrowers in a long time.
 

jhn_plsn

LoanSafe Member
Apr 29, 2008
357
6
18
Riverside, Ca
Makes you wonder if those lenders involved in the latest Independent Mortgage Review settlement were motivated by this.
 

TooBee

LoanSafe Member
Feb 21, 2013
188
0
0
Over the Rainbow
sounds great, however, moving forward this is just wonderful, but i hesitate as to the validity of it's usefulness after all the scrutiny those have experienced the past few years. it's all those borrowers who presently need the help and have been hit the hardest with these situations. what happens to all those still sitting on a limb. what happens to all of them? like saying well you got screwed in 2010, so you're simply not protected.
 

clakeca

LoanSafe Member
Oct 22, 2009
153
3
18
Evan,
Thanks. Many months ago, I began a CH13 and was advised to stop paying on my second mort with Chase, due to the second being stripped through BK. So I did and they "charged it off" to another servicer. But, I had to eventually convert the 13 to a chapter 7, which of course does not strip the second. Good news is that Chase gave me an unreal modification on my first..forgiving princ balance over next three years. I just contacted Chase (who says they still own the second) and they told me that a charged off account cannot qualify for a modification. The deal is, that I had received a HAMP second mod 1 and half years ago. I want to do homework in order to find out if what the rather rude Chase rep told me is true, in light of new laws etc.
Thanks
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
Good news is that Chase gave me an unreal modification on my first..forgiving princ balance over next three years. I just contacted Chase (who says they still own the second) and they told me that a charged off account cannot qualify for a modification. The deal is, that I had received a HAMP second mod 1 and half years ago. I want to do homework in order to find out if what the rather rude Chase rep told me is true, in light of new laws etc.
That is awesome news you have achieved a modification on your 1st mortgage that included a principle reduction! It would be great if you could post your success story in this forum section: Success Stories - Homeowners Who Fought Back & Won ;) Unfortunately, from my understand the rep is correct and I have yet to see a charged off account receive a loan modification. Have you considered the possibility of settling the underwater account for pennies on the dollar?

http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd.html
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
sounds great, however, moving forward this is just wonderful, but i hesitate as to the validity of it's usefulness after all the scrutiny those have experienced the past few years. it's all those borrowers who presently need the help and have been hit the hardest with these situations. what happens to all those still sitting on a limb. what happens to all of them? like saying well you got screwed in 2010, so you're simply not protected.
My thoughts exactly, why would they wait 5+ years after the foreclosure crisis has began to offer homeowners such protections and allow proper time have their account reviewed. Countless people have already lost their homes to foreclosure these past few years and it makes no sense why they would wait another 9 months to get these rules in effect!
 

Viccinoel

LoanSafe Member
Jul 19, 2013
17
0
1
I sure hope something changes. I have been trying to get a modification on our home since June 2013. They have continuly lost my paper work, told me that files I sent by email or fax were damaged. I then sent them by priority mail with detailed table of contents showing all docs and how many pages. They then ask for a signed copy of the docs. Why the hell don't they say that in the first place. This last priority package of my 2012 signed business tax 1040 return and a signed P & L from our business was received ...but alas...lost.... After 3 weeks of calling 1- 2 times a week..they tell me today I have to resubmit because its lost or damaged or some crap like that. They are constantly asking me for more and more documents and it takes so long that the docs I do send that they upload become out of date and they ask for them again. This has been going on since July. I just found out today there is a sale date set on our home for January 31, 2014. I am so ticked off. I not sure what to do. I have done everything they requested. If anyone has some ideas...pleaseeeeeeeeeeeeeeeeeeeeeeeeee help!

Sick to my stomach,
Vicci :(
 

hnguyen

LoanSafe Member
Feb 19, 2010
35
6
8
@Viccinoel. I am in Bankruptcy Chapter 13 and this will stop mortgage companies from moving forward with the foreclosure sales. I have one permanent loan mod accepted through OCWEN (used to be with Countrywide and then BOA). This was done while in Ch 13 and by myself with no professional help and with some advice from this FORUM. The second loan mod was accepted for trial payment but we could not make the payment so we declined.
 
Last edited by a moderator:

hnguyen

LoanSafe Member
Feb 19, 2010
35
6
8
I wanted to fix my error in the original post. OCWEN took over GMAC. The second primary loan mod was with Nationstar (used to be Countrywide and then BOA).

Here is the second part of the original post:

Ok, keep seeking help from this forum. Call BOA back everyday and record the name and ID of the rep you speak to. Make a log sheet for BOA and keep record each time. Record person, ID (if possible), date, time and the number you call. Ask to speak to supervisor and record this too. Also on this forum, there is an email for BOA executives.

God bless you all.
 
Last edited by a moderator:

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
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48
Colorado
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I wanted to fix my error in the original post. OCWEN took over GMAC. The second primary loan mod was with Nationstar (used to be Countrywide and then BOA).

Here is the second part of the original post:

Ok, keep seeking help from this forum. Call BOA back everyday and record the name and ID of the rep you speak to. Make a log sheet for BOA and keep record each time. Record person, ID (if possible), date, time and the number you call. Ask to speak to supervisor and record this too. Also on this forum, there is an email for BOA executives.

God bless you all.
Yes it was edited as were the other two. Posting the information about what you are experiencing with the lender is fine the other is not able to be posted on the forum.
 

pennygram

working for consumers
Sep 29, 2010
583
88
28
yes the new respa rules apply to everyone - even those that have had modifications in the past. I had one in 2012 and one in 2014.
 
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