The Consumer Financial Protection Bureau (CFPB) proposed new rules on Wednesday aimed at helping homeowners facing foreclosure.
The proposed rules would require mortgage servicers to exhaust all options to help homeowners before foreclosing and would limit the fees they can charge while they explore options, such as a temporary payment halt or extending the loan term to lower monthly payments.
“The foreclosure protections under our proposal would begin as soon as a borrower seeks help. There are no magic words, forms or paperwork required. Once a borrower seeks help, the proposal’s servicers would only need to focus on addressing their options,” CFPB officials said in a conference call with reporters.
In a statement, Vice President Harris said the new proposed rules would help “homeowners across America get the help they need to keep their homes, grow their wealth, and keep their families safe.”
“I have always believed that homeownership is more than just having a roof over your head. It means economic security, the opportunity to build wealth, and the foundation for a better future for people across our nation, their children and future generations,” Harris said.
“That’s why I took on some of the biggest banks during the foreclosure crisis, and then, as California Attorney General, I authored and fought for passage of the California Homeowners Bill of Rights, protecting families from unfair mortgages and predatory foreclosure practices.”
The proposed rules would also require servicers to issue more customized notices to borrowers, provide both English and Spanish translations of notices and provide interpreters during phone calls.
The CFPB also streamlined servicer paperwork volume, “strict” timing and other requirements imposed in 2014 in the wake of the foreclosure crisis that saw 7.5 million homes lost between 2006 and 2014.
The new rules would not apply to small servicers, those that service fewer than 5,000 loans, CFPB officials said.
The CFPB sought input on how to improve borrower protections in 2022 and heard from a variety of mortgage industry and borrower advocacy groups, including the Mortgage Bankers Association and the American Bankers Association. Additional comments on the proposed rule must be submitted within 60 days of publication in the Federal Register, including the reasonable effective date of the final rule.
“Ensuring that struggling homeowners can get the help they need without unnecessary obstacles is good for borrowers, good for servicers, and good for the economy as a whole,” said CFPB Director Rohit Chopra.
“The CFPB’s proposal would reduce inevitable foreclosures and make mortgage markets more resilient during future crises.”
