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Consumer Financial Protection Bureau Issues New Mortgage and Foreclosure Procedures for 2014

Here’s some of what’s new:

Protections for struggling borrowers

  • Restricts dual-tracking, when the servicer moves forward with foreclosure while at the same time working with the borrower to avoid foreclosure.
  • Requires notification of foreclosure alternatives.
  • Requires direct, easy, and ongoing access to servicing personnel.
  • Requires a fair review process.
  • Prohibits a foreclosure sale until all other alternatives considered.
  • No surprises

  • Clear monthly mortgage statements.
  • Early warning before interest rate adjusts.
  • Options for avoiding costly “force-placed” insurance.
  • No runarounds

  • Requires that payments be promptly credited.
  • Requires prompt responses to requests for payoff balances.
  • Requires that errors be corrected and information be provided quickly.
  • Requires the maintenance of accurate documents and information and accessibility to them.

These rules also originate from Dodd-Frank and are carried out by the bureau. Small financial institutions that service 5,000 or fewer mortgage loans are exempt from the rule. These servicers are mostly community banks and credit unions.

Rules will take effect in January 2014

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