BBB Tip of the Week: Tighter rules for mortgage companies
The U.S. Treasury Department’s Consumer Financial Protection Bureau has announced tighter rules for your mortgage service company — the people who collect and apply your house payments on behalf of your lender.
The CFPB says the work of mortgage service companies can be challenging due to “sophisticated mortgage products, partial payments, delinquent borrowers, fees, errors and misunderstandings” and that as we saw during the recession, “not all servicers were prepared to handle these challenges.”
In addition, earlier this year, five major banks were required to pay $26 billion in settlement fees over foreclosure issues that included forged signatures and lost paperwork.
Several of the proposed rules are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act; others were developed in response to marketplace issues, the CFPB says. They’re open for public comment until Oct. 9 and the final rules will be issued in January 2013.
The proposed rules would require:
• Monthly mortgage statements
• Warnings before interest rate adjustments
• Following new rules on force-placed insurance (This means servicers could only charge you for buying property insurance when they have a reason to believe you’ve let your own insurance lapse and they’ve sent you two notices estimating the cost.)
• Early outreach for delinquent borrowers
• Prompt crediting of payments
• Accurate information management
• Timely error resolution and information requests
• Direct and ongoing access to servicer personnel
• Evaluation for alternatives to foreclosure
To comment on the proposed rules or to learn more about them, please visit the CFPB’s website at www.consumerfinance.gov/blog/ putting-the-serviceback-in- mortgage-servicing/
As the CFPB says, “foreclosure help is free, and scams are expensive.” Check out their homepage at www.consumerfinance.gov/. Other foreclosure aid resources may include the U.S. Department of Housing and Urban Development (HUD) in your state (call a HUD-approved housing counselor at (888) 995-HOPE) or President Obama’s Making Home Affordable program at www.makinghomeaffordable.gov /pages/default.aspx.