The CFPB has announced that it is working on a mortgage servicing rules proposal that it plans to issue this summer and adopt by January 21, 2013, with an implementation date still under consideration.
Aspects of the rules under consideration include:
- Requiring monthly mortgage statements that include detailed payment information and, for delinquent borrowers, alerts and information about counselors who can assist in working with servicers and avoiding foreclosure.
- Requiring disclosures before the interest rate changes on an adjustable rate mortgage, including when the change will take effect and alternatives the consumer may pursue if the new mortgage payment will not be affordable.
- Additional rights for consumers in connection with the force-placement of hazard insurance by servicers, including a requirement that services provide advance notice and pricing information before charging borrowers for the insurance.
- Requiring servicers to make good faith efforts to contact delinquent borrowers and inform them of foreclosure alternatives.
- Requiring various policies and procedures for the handing of borrower accounts, including prompt crediting of payments, maintaining accurate account information, prompt resolution of borrower claims of errors, and direct, easy and on-going access for delinquent borrowers to the servicer’s foreclosure prevention team.
Various concepts noted by the CFPB already exist under current law and/or in the mortgage provisions of the Dodd-Frank Act.
The CFBP also will seek input on the servicing rules from a panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA) that will address cost of credit matters.
It is likely that elements of the federal banking agency April 2011 consent orders with financial institutions, and the servicing standards in the national mortgage settlement with the five major servicers that was just approved by the court, will play a material role in the development of the CFPB’s servicing rule proposal.