The Consumer Financial Protection Bureau is considering new mortgage servicing rules aimed at addressing what it considers to be two main underlying problems—lack of transparency and lack of accountability. The rules will be formally proposed this summer, and finalized in January 2013.
“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,” said CFPB Director Richard Cordray.
The Dodd-Frank Act grants the CFPB the power to impose certain requirements on servicers, and gives the agency statutory authority to write strong additional rules to help fix the mortgage servicing market. The CFPB can provide up to one year for implementation of the new rules.
The new rules the CFPB is considering include the delivery of clear monthly mortgage statements by servicers that include a breakdown of payments and their due dates, as well as information for delinquent borrowers. The rules would also include a requirement that servicers provide disclosures before the interest rate changes on most adjustable-rate mortgages.
In addition, the CFPB is considering whether to require servicers to give advance notice and pricing information before charging consumers for “force-placed” insurance. The CFPB is also looking at requiring servicers to make good faith efforts to contact delinquent borrowers and inform them of their options to avoid foreclosure.
Meanwhile, the CFPB said it is deliberating rules that would require common-sense policies and procedures for handling consumer accounts and avoiding “runarounds.” These rules would include immediate crediting of payments, up-to-date and accessible records, swift correction of errors, and direct and ongoing access to a servicer foreclosure prevention team.
The CFPB said it may consider additional measures to address mortgage servicing issues in coordination with its federal government partners.