The ongoing foreclosure crisis has made plain the need for meaningful mortgage servicing standards that apply to mortgages and servicers across the country. Both policymakers and homeowners alike are now familiar with a range of mortgage servicing shortcomings that have made it difficult for borrowers to obtain loan modifications and other loss mitigation options.
Consumer protection for servicing is particularly important because, even though borrowers can choose their lender, they cannot controlwho services their loan. One of the challenges raised by borrowers and advocates has been the practice where servicers move the foreclosure process forward while also evaluating loss mitigation applications from the borrower at the same time. In some instances, servicers have gone through with the
foreclosure sale before the borrower has had an opportunity to be fully considered for a modification making their loan affordable.
The servicing standards proposed by the CFPB in this rulemaking are an opportunity to establish process requirements that prevent this harmful practice and ensure that servicers review loss mitigation applications in a timely, efficient and comprehensive manner.