• DYE CULIK PC | Consumer Protection Division

More Foreclosure Protections Issued Under New Rule Enacted by Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau has issued new regulations designed to encourage banks and mortgage servicers to provide homeowners with loan modifications and to protect them against unnecessary foreclosure.

“The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon,” said CFPB Director Richard Cordray. “These updates to the rule will give greater protections to mortgage borrowers.”

foreclosure protections

The new protections include the following:

  1. Over the life of a mortgage, homeowners now get more than one chance to avoid foreclosure, such as with a loan modification or repayment plan. The mortgage only has to have been brought current under the prior foreclosure-avoidance option. Under the current regulations, there is only a right to be reviewed once.

  2. When a loan-modification application is complete, homeowners must promptly be told so in writing. This is important because many foreclosure protections depend on when the date an application is complete.

  3. When a mortgage is transferred to a new servicer, homeowners must often re-start and loss-mitigation applications. Under the new rules, a new mortgage servicer must acknowledge a prior application and finish evaluating it within 30 days.

  4. Mortgage servicers’ foreclosure attorneys must suspend foreclosure when a loan-modification application is submitted 37 days prior to a scheduled sale. This is to address a recurring issue where some servicers have been continuing the foreclosure process while a modification application is under review.

More Information on Regulations

The regulations do not take effect immediately, however, and begin 12 months after they are published in the Federal Register, a federal publication of various regulations.

Press Release: Consumer Financial Protection Bureau Expands Foreclosure Protections

Final Rule: Amendments to the 2013 Mortgage Rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)

Interpretive Rule: Safe Harbors from Liability under the Fair Debt Collection Practices Act for Certain Actions Taken in Compliance with Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)

Culik Law handles mortgage and foreclosure defense cases. Contact us to see if we can help.

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