12 Ways the New CFPB Rule Can Keep People Out of Foreclosure

Recently, the Consumer Financial Protection Bureau (CFPB) issued a new rule that changes how banks go about lending mortgages to potential homeowners. On January 17, 2013, the CFPB issued a complementary rule addressing how mortgage servicers operate, with a goal of preventing needless, mistaken, or fraudulent foreclosures. Here are twelve things the new rule does that can keep Las Vegas homeowners out of bankruptcy.

For borrowers behind on their mortgage payments:

(1) “Dual-tracking,” or working with homeowners to prevent foreclosure without suspending an ongoing foreclosure is restricted. For example, homeowners who’ve asked for a modification must receive a decision from the servicer before the foreclosure can begin.

(2) Servicers must provide homeowners with written notification of foreclosure alternatives.

(3) Servicers must also train and maintain high-quality personnel to handle distressed mortgages.

(4) Mortgage servicers must use foreclosure alternatives to make a good faith effort to keep the homeowner in the home.

(5) The rule prevents foreclosure sales unless all other alternatives are exhausted.

More transparency to homeowners:

(1) Mortgage statements must clearly break down where the homeowner’s payments are going (principal, interest, escrow, etc.)

(2) Servicers must warn homeowners with adjustable-rate mortgages (called “ARMs”) of the first interest level change and any subsequent change that results in a different payment amount.

(3) If homeowners do not purchase property insurance, the servicer may do so in their stead, but it must communicate with homeowners before doing so and inform them of pricing information.

Better procedures for handling mortgage accounts to prevent wasting homeowners’ time:

(1) Mortgage payments must be promptly credited.

(2) Servicers must return written requests for payoff balance information within seven business days.

(3) Servicers have 30 days to respond to written requests to correct an error.

(4) Finally, servicers must also provide maintain accurate and easily accessible records.

More information about the rule can be found in the CFPB’s press release on its Web site.

Although the new rule will help homeowners starting in 2014, it won’t help many who are distressed or facing foreclosure. If this describes your situation, you should definitely discuss it with a Las Vegas bankruptcy lawyer.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-803-9251 to set up your free consultation.