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Proposed Mortgage Rules To Protect Homeowner Borrowers


— Photo Courtesy of http://www.gcsagents.com

The Consumer Financial Protection Bureau  last week proposed rules to protect homeowners and to avoid problems suffered by many borrowers during the housing crisis.

“These rules are about putting the service back in mortgage servicing,” said CFPB Director Richard Cordray, on a conference call with reporters. “The bottom line is to treat consumers fairly by preventing surprises and run-arounds.” The rules provide basic protections, he added.

For  instance requiring that the mortgage servicing company provide monthly statements  which seems so simple but is not standard; breaking down all the numbers such as deposits, principals, interest rates, fees, due dates   and warnings  about new or increased fees including ARMs adjustable-rate mortgage reminders in advance.

“A lot of this stuff is common sense,” said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information, of the proposed rules. “You shouldn’t have to codify proper business practices. That’s not to say everyone is a bad actor. But the ones who did it wrong did it so badly, they forced the regulators’ hands on the rest of the industry.”

One of the major surprises occurs when the borrower no longer maintains property insurance  and the mortgage servicer has the right to force a policy.  The new law requires that forced policy process be  transparent and borrower of policy payments to avoid  borrower not being ready to pay the cost.

Policies and procedures will be required to be in place so borrowers are able to navigate and find assistance when they need including correcting payment issues and receiving timely  payment receipt and corrected documents.

Systems will be required so that the homeowner borrower is able to easily obtain assistance  and options  to avoid foreclosure when they are in default. The new rules also requires review of file  for loan modification and other payment plans application and response  in a timely fashion  restricting ability to proceed with foreclosure unless these options are applied for first.

“The inadequate performance of many mortgage servicers has helped widen the misery for many Americans,” said Richard Cordray, director of the consumer agency, in remarks to reporters announcing the proposed rules. The rules will take effect next year after a public comment period. “Right now, people have too little protection under federal law if their mortgage servicer surprises them with costly fees or gives them the runaround.”




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