Consumer Protection Agency Takes Heat on Mortgage Plan -- From Consumer Groups
August 16, 2012
While the Consumer Financial Protection Bureau (CFPB) is accustomed to criticism from the financial industry and GOP lawmakers, complaints from the pro-consumer camp are unusual. But after the agency proposed rules aimed at helping homeowners who are struggling with their mortgages, consumer groups did indeed protest. While the new requirements would streamline the mortgage servicing industry, consumer advocates say the CFPB missed an opportunity to help keep homeowners in place. That is because it did not outright abolish the practice of "dual tracking," which occurs when a lender moves forward with foreclosure proceedings even as a borrower is in talks for a possible mortgage workout -- although it does take some steps to crack down on the practice. "If somebody is sending in their paperwork and applying ... the servicer can continue going ahead with the foreclosure process -- like having the court declare a person is in default, setting the date for the foreclosure sale," said Center for Responsible Lending President Michael Calhoun. "That just cuts it way too close." He explains the foreclosure processing often is farmed out to companies that specialize in that area and that it can be difficult to stop the wheels on a foreclosure once they start turning. "We need more cushion," according to Calhoun. While the consumer groups are pushing for stricter reforms, they acknowledge the hard work the agency is putting into the requirements. "I don't know if there's another issue that director Cordray has singled out as much as this one to be a priority," said Calhoun.
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