Photo: Flickr /scad_lo
This morning, the Consumer Financial Protection Bureau rolled out a series of final mortgage servicing rules aimed at keeping homeowners off the street.We particularly liked the part where the CFPB made it harder for one arm of a lender to evict homeowners while another arm simultaneously processed a mortgage modification application. It’s a practice called dual-tracking, and it was one of the harshest storylines to emerge from the housing crisis.
Here’s how agency director Richard Cordray outlined the rule in a statement Thursday:
“… under our rules, a servicer cannot start foreclosure proceedings until the borrower has missed payments for at least 120 days. This allows borrowers to get their affairs in order, understand their options, and apply for loss mitigation. In general, once the borrower submits a completed application, the servicer cannot commence or complete the foreclosure process until the application has been addressed and the borrower has had time to respond.”
Turns out consumer activists aren’t too jazzed. They say it won’t do enough to protect homeowners, and that it should give people who aren’t delinquent on mortgage payments the same protection and option to file for loan modifications. Here’s a sampling of gripes we’ve received:
The Americans for Financial Reform called the rule a “welcome change,” but said the 120-day cap on review time for loan modifications isn’t enough for struggling homeowners.
“While the CFPB’s final rule is better than its proposed rule on this score, it still only partly addresses the issue, leaving borrowers vulnerable to unnecessary foreclosures. The rule is also too restrictive about the time period during which servicers have to even consider loan modification requests.”
Their thoughts were echoed by the neighbourhood Assistance Corporation of America, which issued a statement saying the rules won’t come soon enough (they go into effect January 2014).
“CFPB is providing mortgage servicers advance notice to do their dirty work before the new regulations go into effect”, said Bruce Marks, NACA Founder and CEO. “When the new servicing rules go into effect in 2014 the landscape will be very different with many more communities devastated due to CFPB’s failure as the consumer watchdog. When it comes to holding the banks accountable and providing assistance to consumers, CFPB has sat on the sidelines as a no show.”
For the CFPB’s full announcement and comments on the rules go here.
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