Thursday, September 27, 2012

Consumer Financial Protection Bureau seeks to amend both Regulation X of RESPA & Regulation Z of the Truth in Lending Act

Following up on previous blog posts about Regulation X & RESPA our latest chapter brings you a proposal by the CFPB to add new mortgage servicing rules. To be clear, servicing refers to the business of managing the billing, accounts & management of a note and mortgage.

Here are the proposed rules:

  • Monthly mortgage statements
    Servicers would be required to provide clear billing statements including information on the loan, amount due, and application of past payments.
  • Warnings before interest rate adjustments
    Servicers would be required to provide consumers with a new notice 6 to 7 months before the first rate adjustment, as well as earlier and improved notices before rate adjustments causing an increase in a consumer’s mortgage payments.
  • Force-placed insurance
    Servicers can only charge borrowers for buying insurance on the property when they have a reasonable basis to believe that the borrowers have let their own insurance lapse and have given borrowers two notices estimating the cost of the “force-placed insurance.”
  • Early outreach for delinquent borrowers
    Getting a delinquent borrower back on track requires early intervention and information about options available.
  • Prompt crediting of payments
    Payments must be applied as of the day they are received, and the handling of partial payments is clarified.
  • Accurate information management
    Servicers must have reasonable policies to ensure that when borrowers provide documents and information the servicers can find and use them.
  • Error resolution and information requests
    Mistakes happen, but they need to get fixed. Servicers must address borrower concerns about possible errors within certain timeframes and provide the information they request.
  • Direct and ongoing access to servicer personnel
    Delinquent borrowers will be able to contact the right people at their servicer to get information and take steps to avoid foreclosure.
  • Evaluation for alternatives to foreclosure
    Servicers would be required to appropriately review borrower applications for loan modifications or other options to avoid foreclosure.


Make your voice heard - Comment by October 9:
For Regulation Z, click here
For Regulation X, click here

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