CFPB Outlines Plans for Mortgage Servicers

February 14, 2012
Washington Post P. A12
consumer financial protection bureau news

As part of its plan to police mortgage servicers, the Consumer Financial Protection Bureau (CFPB) says that it will revise billing statements sent to homeowners. The new version will present not only the principal balance and interest rate but additionally will disclose the date that the interest could re-set as well as detailed information on late payment or penalty fees. The CFPB also will alter required disclosures for certain complex mortgages and draft new rules to ensure that servicers properly charge for homeowners' insurance. Servicers could not move borrowers into "forced-place insurance" unless they have fallen behind on insurance payments. The consumer watchdog also could propose changes that would allow consumers to find their own replacement insurance rather than rely upon the option provided by the mortgage servicer. The changes set forth by the CFPB on Feb. 13 apply to both servicing firms owned by banks as well as to nonbank servicers, which were excluded from a landmark settlement between servicers and state and federal agencies over improprieties. National Consumer Law Center staff attorney Alys Cohen called the moves by the CFPB a "strong first step," but she hopes that ultimately the regulator will force nonbank servicers to determine if borrowers qualify for a loan workout before they initiate foreclosure. Under the national settlement with servicers, they are only prohibited from moving forward with foreclosure at the same time that a modification is being considered.
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