CFPB Issues New Guidelines for Loan Modification Procedures
One of the main purposes of the regulations is to ensure that homeowners are aware of loss mitigation options soon after becoming delinquent. Within 36 days of a missed payment, the mortgage servicer must attempt live contact with a homeowner, either over the phone or in person, in order to discuss the reason for the delinquency and the availability of loss mitigation options. A similar written notice must be provided within 45 days of delinquency.
The mortgage company must also ensure that a specific person, or team of people, is assigned to each mortgage within 45 days of delinquency. Before this rule, it was not uncommon for homeowners to speak with a new person each time they called the bank, who would have no knowledge about the status of their account. Under this new rule, homeowners should not have this problem in the future.
The person assigned to each file will serve as the primary contact for the mortgage company. It will be their job to provide accurate information about loss mitigation options, what is needed to apply for a modification, the status of any modification request, and any expected or scheduled foreclosure dates.
As long as a modification request is timely submitted, the bank must now confirm whether the application is complete within 5 days. If it is not complete, a reasonable date to submit the remaining documents must be provided. Once a modification request is complete, the bank must then review the homeowner for all loss mitigation options and provide a written decision within 30 days.
If a modification request is denied, a specific reason for the denial must be provided in writing. The homeowner then has 14 days to appeal. And any appeal cannot be reviewed by the same person who issued the original denial. A decision on the appeal must be provided within 30 days.
For most homeowners, these new rules should provide for a clearer and more efficient modification review. If you would like to apply for a modification, or believe that these regulations have not been complied with by your mortgage servicer, then please contact us today for a free consultation.
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