The Consumer Financial Protection Bureau (CFPB) is seeking to require mortgage servicing companies to take further steps to help struggling homeowners before going into foreclosure.
The CFPB said in a press release on Wednesday that it will publish proposed rules on the issue on Wednesday (July 10) and will accept public comments until September 9.
“Ensuring that struggling homeowners can get the help they need without unnecessary obstacles is good for borrowers, good for servicers, and good for the economy as a whole,” CFPB Director Rohit Chopra said in a statement. “The CFPB's proposal will reduce inevitable foreclosures and make mortgage markets more resilient to future crises.”
If finalized, the proposed rules would generally allow mortgage servicing companies to proceed with a foreclosure only after exhausting all possible avenues of assistance or after the borrower has stopped contacting the servicing company, according to the announcement.
The announcement also said the system would allow servicers to individually assess whether borrowers qualify for each form of assistance, rather than waiting for a “complete application” that includes the necessary information for all available options, as is currently required.
The third part of the proposed rule would require servicing companies to provide borrowers with more tailored notices if a borrower defaults on a payment, including information about loan investors, available assistance and steps the borrower can take.
According to the release, the bill would require servicers to provide improved notices to all borrowers in both English and Spanish, provide mortgage assistance communications in the same language as marketing materials sent to borrowers, and provide oral interpretation services for telephone calls with borrowers.
“The CFPB seeks comment on several other topics, including approaches that servicing companies can take to ensure that they are providing accurate and consistent credit reporting information to borrowers who are being reviewed for assistance,” the regulator said in a statement.
In the latest development in this area, the CFPB announced in May that it was investigating junk fees that increase the cost of closing mortgages. The regulator said it was seeking public input on which fees would be subject to competition, how the fees would be set and who would benefit from them, how the fees would change and how they would affect consumers.