In separate press releases, the Consumer Financial Protection Bureau announced new measures to ensure that struggling homeowners are treated fairly by mortgage servicers and outlined consumer protection principles to guide mortgage servicers, investors, government housing agencies, and policymakers in their efforts to develop new foreclosure relief solutions as the Home Affordable Modification Program is nearing its expiration date.
The CFPB's updated servicing rules:
- Require servicers to provide certain borrowers with foreclosure protections more than once over the lives of their loans;
- Expand consumer protections to surviving family members and other homeowners;
- Provide more information to borrowers in bankruptcy;
- Require servicers to notify borrowers when loss mitigation applications are complete;
- Protect struggling borrowers during servicing transfers;
- Clarify servicers' obligations to avoid dual-tracking and prevent wrongful foreclosures;
- Clarify when a borrower becomes delinquent;
- Provide flexibility for servicers to comply with certain force-placed insurance and periodic statement disclosure requirements;
- Clarify requirements regarding early intervention, loss mitigation, information requests, prompt crediting of payments, and the small servicer exemption; and
- Exempt servicers from providing periodic statements under certain circumstances when the servicers have charged off mortgages.
Most of the provisions will take effect 12 months after publication in the Federal Register.
Along with changes to the servicing rules, the CFPB issued an interpretive rule under the Fair Debt Collection Practices Act relating to servicers' compliance with certain mortgage servicing provisions as amended by the new rules.
The CFPB's Principles for the Future of Loss Mitigation call for assistance to consumers facing foreclosure that is accessible, affordable, sustainable, and transparent. The principles span the spectrum of home-retention options, such as forbearance, repayment plans, and modifications, as well as home-disposition options, such as short sales and deeds in lieu of foreclosure. The CFPB noted that a fifth principle - accountability - is not addressed because its mortgage servicing rules provide standards for accountability when loss mitigation programs are offered.