The Dodd-Frank Wall Street Reform and Consumer Protection Act imposed new requirements on mortgage servicers. It also gave the Consumer Financial Protection Bureau (CFPB) authority to write regulations addressing the mortgage servicing market.
In April, the CFPB outlined rules to address two underlying servicing problems uncovered during the financial crisis: the lack of transparency and lack of accountability. The CFPB plans to formally propose rules soon and finalize them in January 2013.
To bring greater transparency to the servicing market, the CFPB is considering rules that mortgage servicers must provide:
► Regular statements with a breakdown of payments by principal, interest, fees, and escrow along with the amount and due date of the next payment;
► Disclosures before the interest rate changes on most adjustable-rate mortgages;
► Options for avoiding “force-placed” insurance; and
► Information about options to help delinquent homeowners avoid foreclosure.
To hold servicers accountable for treating consumers fairly, the rules would require mortgage servicers to:
► Credit a consumer’s account promptly after receiving payment;
► Establish reasonable policies and procedures to minimize errors, prevent document loss, provide accurate information to borrowers, and assist with error resolution;
► Conduct a reasonable investigation of alleged errors and resolve them in a timely manner; and
► Provide delinquent borrowers ongoing access to a “foreclosure prevention team” of employees who are dedicated to helping troubled borrowers.
The CFPB will work extensively with consumers and the financial services industry to develop the proposed mortgage servicing rules. Visit consumerfinance.gov.