CFPB Proposes New Servicer Rules, Open for Comment
ThernConsumer Financial Protection Bureau (CFPB) is requesting comments on two setsrnof proposed rules governing the operation of mortgage servicers. The new regulations, posted in The Federal Register, cover servicer’srnoperations involving both performing and delinquent mortgage loans.</p
CFPBrnsaid that the financial crisis has brought into focus many of the problems withrnbad practices and sloppy record keeping that have plagued the servicingrnindustry for years. With millions ofrnhomeowners falling delinquent on mortgages and facing or undergoing foreclosure,rncomplaints mounted about servicers losing applications and paper work for loanrnmodifications, homes being foreclosed in error, borrowers unable to reachrnpersonnel who could assist them and facing difficulties in getting obviousrnmistakes corrected.</p
ThernDodd-Frank Wall Street Reform and Consumer Protection Act gave CFPB authorityrnto address some of these problems and the agency is implementing and refiningrnrequirements for services which will be finalized in January, 2013. The first set of rules set out requirementsrncovering all mortgages and are designed, CFPB said, to provide consumers with “clear and timely information about their mortgages so theyrncan avoid costly surprises.” </p<ul class="unIndentedList"
The second set of proposed rulesrnwould impose requirements aimed at preventing events that might unnecessarilyrnlead to foreclosure. They include rulesrnfor handling consumer accounts, correcting errors, and evaluating borrowers forrnoptions to avoid foreclosure. </p<ul class="unIndentedList"
“Millions of homeowners are struggling to payrntheir mortgages, often through no fault of their own,” said CFPB DirectorrnRichard Cordray. “These proposed rules would offer consumers basic protectionsrnand put the ‘service’ back into mortgage servicing. The goal is to preventrnmortgage servicers from giving their customers unwelcome surprises andrnrunarounds.”</p
The agency said that in formulatingrnthe rules it sought impact from consumer groups, small servicers, and otherrngovernment agencies and industry stakeholders. rnThe proposed rules released today represent refinements that came out ofrnthese discussions, particularly regarding processes for evaluating consumersrnfor alternatives to foreclosure – and also lessen potential burdens on smallrnservicers. </p
CFPB is also working with thernCornell University e-Rulemaking Initiative (CeRI) to make it easier for thernpublic to comment on the proposed rules through a pilot project calledrnRegulation Room (www.regulationroom.org). Regulation Room providesrna mechanism for people and groups to learn about, discuss, and react to selectedrnrules proposed by federal agencies and CFPB expects contributions to RegulationrnRoom, while not becoming formal public comments, will be incorporated into arnpublic report prepared by CeRI researchers and submitted to the CFPB for use inrnpreparation of a final rule.</p<pThe public will have 60 days, until October 9, 2012,rnto review and provide comments on the proposed rules. The CFPB will review andrnanalyze the comments before issuing final rules in January 2013.
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