This week the federal government issued more new rules for mortgage servicers. The rules are aimed at protecting homeowners facing foreclosure. However, as often happens, consumer groups say the rules don’t go far enough to help prevent borrowers from unnecessary foreclosure.
Mortgage servicers collecting payments and handling loan modifications and foreclosures have been swamped since the housing crisis began, and there have been abuses and in some cases unnecessary foreclosures as a result. The government says that the new rules are intended to ensure fair treatment of for all borrowers and establish stronger protections for those struggling to save their homes.
The new rules included restrictions that prohibit servicers from foreclosing on borrowers who are seeking loan modifications. Servicers are required to explore all alternatives to foreclosure. Clear, straightforward mortgage statements are also required.
Consumer advocates say that these new rules don’t go far enough. These groups contend that the failure to require meaningful loan modification protections is a retreat from current safeguards included in the soon-to-expire HAMP loan modification program. These consumer advocates want requirements for servicers to lower loan rates and postpone payments before foreclosure. Here are bullet points of the new rules:
• Wait for modification - servicers will no longer be allowed to begin foreclosure proceedings while a homeowner is seeking a loan modification.
• No foreclosure until alternatives considered - if a borrower applies for a loan modification at least 37 days before their foreclosure auction is scheduled, the servicer must consider and respond to the request.
Of course there are is a lot of fine print, but it remains to be seen how the new rules will help. Foreclosures are falling nationally, and this could help to accelerate that trend.
This week the federal government issued more new rules for mortgage servicers. The rules are aimed at protecting homeowners facing foreclosure. However, as often happens, consumer groups say the rules don’t go far enough to help prevent borrowers from unnecessary foreclosure.
Mortgage servicers collecting payments and handling loan modifications and foreclosures have been swamped since the housing crisis began, and there have been abuses and in some cases unnecessary foreclosures as a result. The government says that the new rules are intended to ensure fair treatment of for all borrowers and establish stronger protections for those struggling to save their homes.
The new rules included restrictions that prohibit servicers from foreclosing on borrowers who are seeking loan modifications. Servicers are required to explore all alternatives to foreclosure. Clear, straightforward mortgage statements are also required.
Consumer advocates say that these new rules don’t go far enough. These groups contend that the failure to require meaningful loan modification protections is a retreat from current safeguards included in the soon-to-expire HAMP loan modification program. These consumer advocates want requirements for servicers to lower loan rates and postpone payments before foreclosure. Here are bullet points of the new rules:
• Wait for modification - servicers will no longer be allowed to begin foreclosure proceedings while a homeowner is seeking a loan modification.
• No foreclosure until alternatives considered - if a borrower applies for a loan modification at least 37 days before their foreclosure auction is scheduled, the servicer must consider and respond to the request.
Of course there are is a lot of fine print, but it remains to be seen how the new rules will help. Foreclosures are falling nationally, and this could help to accelerate that trend.