The Consumer Financial Protection Bureau recently announced mortgage servicing rules updates. Read the alert at http://www.consumerfinance.gov/about-us/blog/weve-updated-our-mortgage-servicing-rules-provide-greater-protections-mortgage-borrowers-and-other-homeowners/. Here are some of the important highlights:
- When a homeowner applies for a modification, deed in lieu, or other alternative to foreclosure (known as “loss mitigation”), the servicer must let the borrower know when their application is complete. In the past, servicers would fail to keep borrowers informed as to the status of their applications. This rule seeks to improve servicer accountability.
- Homeowners may now be eligible to apply for loss mitigation more than once. For example, if a loan modification is initially rejected, the homeowner may re-apply.
- Family members, heirs or successors shall have increased rights. If ownership in a mortgaged home is transferred due to death, divorce or legal separation, servicers are now required to provide information and notices to these successors.
- Only limited extensions will be given to new servicers on loss mitigation applications. Now, if servicing transfers, generally, the new servicing entity must evaluate complete applications within 30 days.
In announcing the mortgage servicing rules updates, Bureau Director Richard Cordray stated:
The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon … These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable.
If you are in foreclosure, or if you are behind in your mortgage payments and have applied for mortgage assistance, speak to an attorney regarding your options. Keep track of all your correspondence with your servicer, maintain copies of your application paperwork, and don’t ignore important deadlines for submitting information to your servicer.