Weltman has recently learned that the Consumer Financial Protection Bureau (CFPB) has proposed new rules aimed at providing greater assistance to homeowners before initiating foreclosure proceedings.
The excerpts concerning the new rules are taken directly from the news release on the CPFB’s website here.
The CFPB proposed new rules to make it easier for homeowners to get help when they are struggling to pay their mortgage. The proposal, if finalized, would require mortgage servicers to focus on helping borrowers, not foreclosing, when a homeowner asks for help. The proposed changes would also make it simpler for servicers to offer assistance by reducing paperwork requirements, improving communication with borrowers, and ensuring critical information is provided in languages borrowers understand.
The excerpts concerning the new rules are taken directly from the news release on the CPFB’s website here.
The CFPB proposed new rules to make it easier for homeowners to get help when they are struggling to pay their mortgage. The proposal, if finalized, would require mortgage servicers to focus on helping borrowers, not foreclosing, when a homeowner asks for help. The proposed changes would also make it simpler for servicers to offer assistance by reducing paperwork requirements, improving communication with borrowers, and ensuring critical information is provided in languages borrowers understand.
If finalized, the proposal will:
Stop dual tracking and limit fees
The proposed rule would require servicers to try to help borrowers first, before foreclosing, when they request assistance. Servicers would generally only be allowed to move ahead with foreclosure after all possibilities for assistance are exhausted or the borrower has stopped communicating with the servicer. The proposal would also limit the fees a servicer can charge a borrower while the servicer is reviewing possible options to help the borrower. This is intended to create strong incentives for servicers to act quickly and fairly when reviewing borrowers' requests for help.
Reduce delays by streamlining paperwork requirements
Currently, a servicer cannot evaluate whether a borrower is eligible for assistance without a “complete application” that includes all information needed to assess eligibility for all available options. This can delay assistance offers, hurting both homeowners and servicers. Under the proposal, servicers would have more flexibility to review borrowers for each option individually, potentially enabling quicker assistance. Studies show streamlined loan modifications with fewer paperwork requirements lead to more homeowners receiving modifications and ultimately staying in their homes.
Improve borrower-servicer communications
The proposed rule would require servicers to provide more tailored notices to borrowers, so they know what actions they can take if they want to. This includes changing the notices that borrowers get shortly after missing a payment to include information about who the loan investor is and how to get information about available assistance.
Ensure borrowers receive critical information in languages they understand
Under the proposal, borrowers who received marketing materials in another language could request mortgage assistance communications in that same language. The proposed rule would also require servicers to provide the improved notices in both English and Spanish to all borrowers, as well as make available oral interpretation services in telephone calls with borrowers.
The new provisions would not apply to small servicers. All existing requirements remain in effect until the effective date of a final rule. Comments on the new proposed rules are due by September 9, 2024 and can be submitted through the CFPB’s website.
To view the full proposed rule, please click here. The CFPB has also provided a “fast facts” document for additional questions – please view that here.
If you have any questions about these proposed rule changes, please do not hesitate to reach out to shareholder Ben Hoen from Weltman’s Real Estate Default Group.
These blogs are not a solicitation for business and are not intended to constitute legal advice on specific matters, create an attorney-client relationship, or be legally binding in any way.
The proposed rule would require servicers to try to help borrowers first, before foreclosing, when they request assistance. Servicers would generally only be allowed to move ahead with foreclosure after all possibilities for assistance are exhausted or the borrower has stopped communicating with the servicer. The proposal would also limit the fees a servicer can charge a borrower while the servicer is reviewing possible options to help the borrower. This is intended to create strong incentives for servicers to act quickly and fairly when reviewing borrowers' requests for help.
Reduce delays by streamlining paperwork requirements
Currently, a servicer cannot evaluate whether a borrower is eligible for assistance without a “complete application” that includes all information needed to assess eligibility for all available options. This can delay assistance offers, hurting both homeowners and servicers. Under the proposal, servicers would have more flexibility to review borrowers for each option individually, potentially enabling quicker assistance. Studies show streamlined loan modifications with fewer paperwork requirements lead to more homeowners receiving modifications and ultimately staying in their homes.
Improve borrower-servicer communications
The proposed rule would require servicers to provide more tailored notices to borrowers, so they know what actions they can take if they want to. This includes changing the notices that borrowers get shortly after missing a payment to include information about who the loan investor is and how to get information about available assistance.
Ensure borrowers receive critical information in languages they understand
Under the proposal, borrowers who received marketing materials in another language could request mortgage assistance communications in that same language. The proposed rule would also require servicers to provide the improved notices in both English and Spanish to all borrowers, as well as make available oral interpretation services in telephone calls with borrowers.
The new provisions would not apply to small servicers. All existing requirements remain in effect until the effective date of a final rule. Comments on the new proposed rules are due by September 9, 2024 and can be submitted through the CFPB’s website.
To view the full proposed rule, please click here. The CFPB has also provided a “fast facts” document for additional questions – please view that here.
If you have any questions about these proposed rule changes, please do not hesitate to reach out to shareholder Ben Hoen from Weltman’s Real Estate Default Group.
These blogs are not a solicitation for business and are not intended to constitute legal advice on specific matters, create an attorney-client relationship, or be legally binding in any way.
