The Consumer Financial Protection Bureau just rolled out eight new rules it's hoping will keep mortgage lenders in check and future homeowners in the black.
The rules aren't final yet – the agency pitches them to Congress this summer – but they could change everything about the borrowing experience.
“The mortgage servicing rules we are considering reflect two basic, common-sense principles – no surprises and no runarounds,” said CFPB Director Richard Cordray in a statement Tuesday. “For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress. It’s time to put the ‘service’ back in mortgage servicing.”
Here's what they've got planned:More accountability for communication
Clear Monthly Mortgage Statements: Statements will have everything out in the open – a breakdown of payments by principal, interest, fees, and escrow; the amount of and due date of the next payment; and, for delinquent borrowers, alerts and information about counselors who can help them work with servicers and avoid foreclosure.
Warning Before Interest Rate Adjustments: Servicers would be required to provide disclosures before the interest rate changes on most adjustable-rate mortgages.
Options for Avoiding Costly “Force-Placed” Insurance: Bank of America and Citigroup are already at the center of a New York state probe into claims they are among several big banks that have been overcharging consumers for insurance. This rule would give the consumers more rights including requiring servicers to give advance notice and pricing information before charging consumers for this insurance
Early Information and Options for Avoiding Foreclosure: This is all about giving customers a chance to modify their loans if they fall into default.Better ways to handle consumer accounts
Payments Immediately Credited: Servicers generally would have to credit a consumer’s account promptly after receiving payment.
Records Kept Up-to-Date and Accessible: Minimize errors, prevent document loss, provide accurate information to borrowers, and assist with error resolution.
Errors Corrected Quickly: Another time suck the CFPB hopes to eliminate by requiring lenders to respond promptly to customer complaints.
Direct and Ongoing Access to Servicer Foreclosure Prevention Team: Keep lines of communication open by giving easy access to employees for struggling homeowners.Now see 9 stories of homeowners who bounced back after foreclosure >
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- Richard Cordray