On July 10, 2024, the CFPB proposed new rules to make it easier for homeowners to get help when they are struggling to pay their mortgage. Under the proposed rule, mortgage servicers would be required to assist homeowners who need help instead of foreclosing their properties.
In 2022, the CFPB seeked public input on improving protections for borrowers facing financial hardships. It was suggested to the CFPB that a simpler, more flexible approach to mortgage assistance would be beneficial both to the mortgage industry and to borrowers. In particular, the CFPB received a positive response about pandemic-related approaches to helping struggling borrowers.
The proposed rule, if finalized, would:
Stop dual tracking and limit fees. The proposed rule would require servicers to try to help borrowers first, before foreclosing, and would generally only be allowed to move ahead with foreclosure after all possibilities for assistance are exhausted. The proposal also aims to restrict the fees a loan servicer can impose on a borrower while assessing ways to assist them, pushing servicers to promptly and impartially handle borrower assistance requests.
Reduce delays by streamlining paperwork requirements. Under the proposal, servicers would have more flexibility to review borrowers for each option individually, potentially enabling quicker assistance.
Improve borrower-servicer communications. The proposed rule would require servicers to provide more tailored notices to borrowers, including changing the notices that borrowers get shortly after missing a payment to include information about who the loan investor is and how to get information about available assistance.
Ensure borrowers receive critical information in languages they understand. Under the proposal, borrowers who received marketing materials in another language could request mortgage assistance communications in that same language. The proposed rule would also require servicers to provide the improved notices in both English and Spanish to all borrowers, as well as make available oral interpretation services in telephone calls with borrowers.
Read the CFPB’s press release here.
The proposed rule can be found here.
