The Consumer Financial Protection Bureau (CFPB) is proposing new transparency and accountability rules for banks that handle mortgages, with the aim of cutting down on the number of avoidable or improper foreclosures.
Some of the proposed rules deal directly with how mortgage services deal with their non-delinquent clients. But along with those, CFPB is proposing a set of regulations that address instances where banks have wrongfully foreclosed on people — like the woman with the disabled daughter who was foreclosed on after she’d been offered a modification, the couple that was accidentally foreclosed on for paying a week early, or the many homeowners foreclosed on by people whose only qualifications included pizza slicing.
A press release outlined how that set of rules would work:
Payments Promptly Credited: Servicers generally would have to credit a consumer’s account as of the date a payment is received.
Maintain Accurate and Accessible Documents and Information: Servicers would be required to establish reasonable policies and procedures to provide accurate and current information to borrowers and minimize errors. They would have to submit accurate legal documents that comply with applicable law, help borrowers on options to avoid foreclosure, and provide oversight of their contractors and foreclosure attorneys.
Errors Corrected Quickly: If a consumer notifies the servicer that she thinks there has been an error, the servicer would be required to acknowledge receiving the notification, conduct a reasonable investigation, and, in a timely manner, inform the consumer about the resolution.
Direct and Ongoing Access to Servicer Personnel To Assist Delinquent Borrowers: Servicers would be required to provide delinquent borrowers with direct, easy, ongoing access to employees who are dedicated and empowered to help delinquent borrowers.
Requirements to keep homeowners informed include: Clarifying monthly statements to be more detailed and easier to understand; giving homeowners warnings before adjusting their rate, along with information on how to proceed if the new rate is too high; and providing timely notice and achievable alternatives when a homeowner might be foreclosed on.