Consumer Bureau Issues New Mortgage Servicing Guidelines
First, servicers will be required to send monthly or periodic mortgage statements. Although most homeowners already receive monthly statements, there is no legal requirement that a servicer send them. This issue often comes up when homeowners file for bankruptcy, and their servicers stop sending mortgage statements, even though the homeowners intend to keep paying.
Next, a mortgage servicer must provide a payoff statement (an itemization of the total amount required to pay off the mortgage) within seven business days. Massachusetts law already requires that banks provide this information within five business days, pursuant to Mass. Gen. Laws ch. 183, § 54D. Under Massachusetts law, failure to provide this information is subject to a $500 penalty.
Finally, and perhaps most importantly, mortgage servicers must provide homeowners with written information about loan-modification and loss-mitigation programs that are available. Servicers must also have procedures in place to ensure that they can assist borrowers. And, servicers must stop what is called “dual tracking,” which is where a loan modification and foreclosure are being pursued by the servicer at the same time. This was already limited as to many banks under the National Mortgage Settlement, but this regulation extends the prohibition to virtually all banks in the U.S.
The CFPB has also issued other regulations requiring mortgage servicers to promptly credit homeowners’ payments, and to limit force-placed insurance if the servicer knows the borrower already has a policy.
Because these regulations are not effective yet, it remains to be seen how well they will work, but this is a step in the right direction toward helping homeowners.