Avoiding Mortage Foreclosure: New Rules

Author: Konstantilakis Law, PC
Published: 1 Jun 2012 - Updated: 7 Sep 2021

Table of Contents:
Synopsis - Overview - Related Content

Synopsis

Proposed rules to help homeowners get better information from mortgage services and possibly avoid foreclosure.

Overview

Consumer Financial Protection Bureau Proposes Home Mortgage Rules - The CFPB has proposed new rules that would require residential mortgage service's to disclose important information more fully and clearly and make it easier for distressed homeowners to get help.

A mortage is defined as the charging of real (or personal) property by a debtor to a creditor as security for a debt (esp. one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period.

The Consumer Financial Protection Bureau recently proposed rules to help homeowners get better information from mortgage services and possibly avoid foreclosure. The rules are proposed under the provisions of the Dodd-Frank Act, the 2010 financial reform law, and the CFPB's own authority under that law. After a period for public comment, the CFPB is expected to finalize the rules by January 2013.

Foreclosure Crisis

By now, most Americans are familiar with the foreclosure crisis that struck after the collapse of the housing market. More recently, a new crisis became apparent with the news that many mortgage services - companies that handle mortgages and process payments on behalf of lenders - were engaging in illegal shortcuts, such as forging signatures and improperly executing documents. These wrongful practices were a major part of the "robo-signing" scandal. As a result, many homeowners were mistakenly or illegally foreclosed on.

Earlier this year, mortgage lenders agreed to adopt better practices and pay $25 billion for states to assist homeowners who lost or are threatened with losing their homes.

New Rules

The CFPB's new rules would promote transparency and accountability, requiring services to give homeowners the information they need to understand their options and make difficult decisions. The rules would require services to provide clear, accurate and standardized monthly accounting statements with itemized fees. The statements must warn borrowers of any imminent changes in the loan interest rate or insurance coverage.

The proposed rules would also help homeowners facing foreclosure by providing them with better information and more options. Mortgage services are required to make good faith efforts to inform delinquent borrowers of the risk of foreclosure, the availability of foreclosure counseling and options to avoid the loss of their homes. Services must maintain complete and up-to-date records to avoid the risk of mistaken and improper foreclosures.

In addition, services must investigate any errors within 30 days. Services are also required to make support staff more accessible to distressed borrowers who need assistance.

People struggling to make their monthly mortgage payments have options. Speak with an experienced bankruptcy attorney about your situation and learn what solutions may be right for you and your family.

Attribution/Source(s): This quality-reviewed publication was selected for publishing by the editors of Disabled World (DW) due to its relevance to the disability community. Originally authored by Konstantilakis Law, PC and published on 1 Jun 2012, this content may have been edited for style, clarity, or brevity.