CFPB Proposes Rule Requiring Mortgage Services to Help Struggling Homeowners

The Consumer Financial Protection Bureau (CFPB) aims to require mortgage servicers to do more to help struggling homeowners before foreclosing.

The regulator issued a proposed rule on this issue Wednesday (July 10) and will accept public comment on it until Sept. 9, the CFPB said in a Wednesday press release.

“When struggling homeowners can get the help they need without unnecessary obstacles, it is better for borrowers, servicers and the economy as a whole,” CFPB Director Rohit Chopra said in the release. “The CFPB’s proposal would reduce avoidable foreclosures and make the mortgage market more resilient during future crises.”

If finalized, the proposed rule would generally allow mortgage services to move ahead with foreclosure only after they have tried all possible means of assistance or when the borrower has stopped communicating with the servicer, according to the release.

It would also allow servicers to review borrowers’ eligibility for each form of assistance individually, rather than waiting for a “complete application” that includes the information needed for all available options, as is currently required, the release said.

A third part of the proposed rule would require servicers to provide borrowers with more tailored notices when they miss a payment, including information about the loan investor, available assistance and the actions the borrower can take, per the release.

It would also require servicers to provide the improved notices in both English and Spanish to all borrower, to offer mortgage assistance communications in the same language as marketing materials sent to the borrower, and to offer oral interpretation services in telephone calls with borrowers, according to the release.

“The CFPB is requesting comment about several other topics, including possible approaches it could take to ensure servicers are furnishing accurate and consistent credit reporting information for borrowers undergoing review for assistance,” the regulator said in the release.

In another recent move in this area, the CFPB said in May that it is investigating junk fees that increase the closing costs on mortgages. The regulator said it is looking for public comment on which fees are subject to competition, how fees are established and who benefits from them, how fees are changing and what impact they have on consumers.

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