As the debate over how to reform the housing finance market takes a back seat to the 2012 General Election, Dodd-Frank’s statutory changes to mortgage servicing will see no delay in its implementation. On April 10, 2012, the Consumer Financial Protection Bureau released its first set of proposed mortgage servicing rules:
“The proposed rules currently under consideration aim to protect consumers from surprises by directing servicers to provide:
- Clear monthly mortgage statements that explicitly breakdown principal, interest, fees, escrow, and due dates
- Warnings before adjusting interest rates on certain adjustable rate mortgages (ARMs) that explain how the new rate was determined, when it will take effect, dates of future adjustments, and a list of alternatives for consumers to consider
- Options for avoiding expensive “forced-placed” insurance, which is insurance charged to borrowers by servicers when their existing insurance appears to have lapsed
- Early outreach to struggling borrowers that informs them of potential options to avoid foreclosure
We also want to address the issue of consumers getting the “run-around” when dealing with servicers. To accomplish this, the Bureau is considering proposals that would require:
- Payments to be credited to consumer accounts the day payment is received
- Implementing new policies and procedures so that records are kept up-to-date and accessible
- Quickly addressing and correcting errors
- Giving homeowners direct and ongoing access to servicer staff members who have access to the homeowners’ records and can actually help address their issue(s)”
The rules are scheduled to become effective in early 2013 unless the Bureau issues finals rules first. An outline of the proposals under consideration was also posted on the Bureau’s website.
To learn more about these proposed changes to mortgage servicing as well as other housing reforms arising out of the financial crisis, please register for “The Foreclosure Crisis: Challenges and Solutions to the Mortgage Meltdown,” Friday, April 13, 2012 at the International House on the U.C. Berkeley Campus, and stay tuned as we live-blog the event throughout the day.