Washington, DC
Tuesday, April 10, 2012
Richard
Cordray, Director of the Consumer Financial Protection Bureau (CFPB),
announced new rules for mortgage servicers, the companies which collect
home loan payments from borrowers. He spoke at Operation Hope, a
nonprofit which promotes financial literacy for consumers.Tuesday, April 10, 2012
The rules, which require mortgage servicers to be more transparent and accountable with borrowers, will be formally proposed this summer for public comment and finalized on January 21, 2013. They would require mortgage servicers to provide consumers with clear and timely information about changes to their mortgages.
Cordray was the Attorney General of Ohio before his controversial recess appointment as CFPB Director by President Obama on January 4, 2012. Congressional Republicans complained that the President did not have the power to bypass the Senate nomination process because Congress was not officially in recess.
Cordray's nomination was stalled in the Senate by GOP members who opposed the creation of the consumer bureau, which was authorized as part of the Dodd-Frank regulatory reform act of 2010.
Congressional Republicans also complain that CFPB rules are "too subjective." During a House Financial Services Committee hearing in March, Chair Spencer Bachus (R-AL) said that the standards for deceptive or abusive practices were "too vague.
CFPB: What the proposed mortgage servicing rules could mean for you
By Ashley Gordon
April 11, 2012
Delinquencies. Defaults.
Foreclosures.
Let’s face it: before the housing crisis, these and many other terms were foreign to many of us. Since 2008, however, they’ve become much more commonplace across America.
There’s no doubt that the mortgage servicing market can be confusing for the average consumer to understand and navigate. And it’s even more overwhelming for homeowners in financial distress. Being aware of what you owe and to whom you should make your payments, understanding changes to your interest rate, and knowing how to get help are important questions that deserve well-considered answers.
Let’s face it: before the housing crisis, these and many other terms were foreign to many of us. Since 2008, however, they’ve become much more commonplace across America.
There’s no doubt that the mortgage servicing market can be confusing for the average consumer to understand and navigate. And it’s even more overwhelming for homeowners in financial distress. Being aware of what you owe and to whom you should make your payments, understanding changes to your interest rate, and knowing how to get help are important questions that deserve well-considered answers.
Today we announced that the Bureau is considering new proposed rules
that would help homeowners better manage their mortgages with mortgage
servicers. Mortgage servicers are companies responsible for collecting
payments from borrowers on behalf of the actual loan owner. The servicer
handles customer service, loan modifications, collections, and
foreclosures.
The servicing industry had problems before the financial crisis, and many servicers have failed to keep pace with the increasing number of mortgage delinquencies. Many borrowers have complained that they did not receive the information they needed to stay on track with their mortgage and avoid foreclosure. Other borrowers ran into trouble because they had difficulty getting answers from their servicers. With better information, some people might have been able to save their homes from foreclosure.
The proposed rules currently under consideration aim to protect consumers from surprises by directing servicers to provide:
The servicing industry had problems before the financial crisis, and many servicers have failed to keep pace with the increasing number of mortgage delinquencies. Many borrowers have complained that they did not receive the information they needed to stay on track with their mortgage and avoid foreclosure. Other borrowers ran into trouble because they had difficulty getting answers from their servicers. With better information, some people might have been able to save their homes from foreclosure.
The proposed rules currently under consideration aim to protect consumers from surprises by directing servicers to provide:
- Clear monthly mortgage statements that explicitly breakdown principal, interest, fees, escrow, and due dates
- Warnings before adjusting interest rates on certain adjustable rate mortgages (ARMs) that explain how the new rate was determined, when it will take effect, dates of future adjustments, and a list of alternatives for consumers to consider
- Options for avoiding expensive “forced-placed” insurance, which is insurance charged to borrowers by servicers when their existing insurance appears to have lapsed
- Early outreach to struggling borrowers that informs them of potential options to avoid foreclosure
- Payments to be credited to consumer accounts the day payment is received
- Implementing new policies and procedures so that records are kept up-to-date and accessible
- Quickly addressing and correcting errors
- Giving homeowners direct and ongoing access to servicer staff members who have access to the homeowners’ records and can actually help address their issue(s)
We expect to issue a
proposal for public comment this summer and to finalize rules by early
next year. We believe these rules represent important steps to
demystifying the ambiguity of mortgage servicing and providing
homeowners with information and assistance before it’s too late.
US Consumer Bureau Chief Announces Plans to Reform Mortgage Servicing Market at Washington DC HOPE Center
Posted by Allen Yekikian on Apr 11th, 2012The Consumer Financial Protection Bureau introduced on April 10 a package of rules intended to provide more transparency and accuracy in the mortgage industry. The announcement was delivered by Consumer Financial Protection Bureau Director Richard Cordray at the Washington D.C. HOPE Financial Dignity Center.
Cordray, who was introduced by Operation HOPE’s Founder, Chairman and CEO John Hope Bryant, proposed new rules include bank simplification of monthly mortgage statements, warnings before interest rate adjustments, and increased efforts to work with homeowners who have fallen behind in their payments. Following his remarks he answered questions.
According to the New York Times, the new measures will “take aim at the industry’s aggressive tactics and sloppy record keeping that bedeviled homeowners in the aftermath of the financial crisis. The companies, typically arms of the nation’s biggest banks, collect payments and handle customer service for mortgage lenders.” You can read more about the new oversight measures here.
In attendance were Operation HOPE National Board member Stephen Ryan as well as MidAtlantic Regional Board members Catherine Neihaus, Ed Stucky, Muriel Garr representing F. Scott Wilfong.
The press event was also attended by many of the center’s mortgage counseling clients. The HOPE Mortgage HOPE Crisis Hotline is HUD approved and has received more than 147,000 calls, averages over 500 new cases each month, has counseled more than 40,000 clients and funded more than $450 million in loan modifications, since it was launched in 2007.
Operation HOPE is America's leading nonprofit social investment banking and financial literacy empowerment organization.
Through several global initiatives and its three principal programs: Banking on Our Future (teaching school children about money), HOPE Coalition America (financial emergency preparedness and disaster recovery), and the HOPE Center Banking Network (loans, bill pay, computer literacy, understanding banking principles)HOPE is leading the “silver rights” movement towards making free enterprise and capitalism relevant to all underserved communities.
For more information about Banking on Our Future or other programs, visit us at our website.
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