consumer financial protection bureau (CFPB) will seek ways to streamline and simplify mortgage servicing rules in the coming months following public comment on how borrowers can reduce the risk of trouble with their mortgage payments, according to a blog post by CFPB director Rohit Chopra. Will do
Chopra noted in the post the importance of mortgage servicing rules in their ability to keep borrowers with their loans — as chosen by the lender and not the borrower, he said.
“In the mid-2000s, violent hostage practices spread across the country,” wrote Chopra. “Many large financial institutions with mortgage servicing operations experienced severe breakdowns. This resulted in a crisis where 10 million homes ended up in foreclosure between 2006 and 2014. The foreclosure crisis was an important catalyst for the creation of the Consumer Financial Protection Bureau.
In addition to the establishment of the CFPB and the implementation of the first mortgage regulations in 2014, the pandemic has shed light on how some servicing regulations work in the face of adversity – particularly in relation to rising national unemployment rates.
“The CFPB observed that there were places where the rules could be modified to reduce unnecessary complexity,” Chopra said. “Last fall, the CFPB asked the public for input on ways to reduce risk for borrowers who experience disruptions in their ability to make mortgage payments, including input on mortgage forbearance options available to borrowers. Specifically, we sought input on the characteristics of pandemic-related tolerance programs and whether there are ways to automate and streamline long-term loss mitigation support.
Stakeholders, including housing organizations, homeowner advocates and mortgage servicers, noted that borrowers in need of mortgage assistance routinely face increased complexity and paperwork that affects both borrowers and servicers.
“According to commentators, temporary pandemic-related changes to mortgage servicing rules helped mitigate this problem and get to borrowers more quickly,” Chopra wrote. “Commenters also expressed concern that borrowers are often charged servicing fees and experience negative credit reporting while waiting for their mortgage servicer to review their options.”
As a result, the CFPB will investigate and seek input on ways that mortgage servicing rules can be streamlined and simplified, Chopra said.
“When homeowners struggling to make payments get the help they need without unnecessary delays or disruptions, it’s better for borrowers, servicers and the economy,” Chopra wrote. “The CFPB will use this input from commenters to propose ways to simplify and streamline mortgage servicing rules.”
Chopra said the CFPB would propose streamlining some rules “only if it would encourage greater agility on the part of mortgage servicers in responding to future economic shocks, as well as continue to ensure they serve borrowers promptly and quickly.” Fulfill your obligations to assist impartially.”
