New federal rules aim to protect mortgage holders

February 27, 2013 (Press-News.org) The Consumer Financial Protection Bureau recently announced new rules designed to protect mortgage holders from poor service and unexpected fees charged by companies that collect their monthly mortgage payments. Specifically, mortgage servicers will be required to provide clear monthly billing statements, warn mortgage holders before interest rate increases and actively help families avoid foreclosure. In addition, mortgage servicers are also required to keep better records, promptly credit borrowers' accounts and quickly correct errors.

Perhaps most importantly, the CFPB's new rules offer protections to those who are facing foreclosure. According to the agency, mortgage companies will be blocked from pursuing foreclosure on a person's property while he is actively seeking to lower his monthly payments or taking other action to avoid losing his home. This change will end the practice of dual-tracking, where a mortgage company can move on foreclosing on a home while discussing a loan modification with the borrower at the same time.

These changes are part of the CFPB's efforts to reform the mortgage industry in an effort to prevent the sort of practices that helped fuel the financial crisis. The agency has focused its efforts on mortgage servicers, the companies that foreclose on homes when borrowers fail to make payments, mainly because consumers are unable to choose their own servicer. Rather, mortgage servicers purchase the right to collect payments from the original lenders. These companies have been widely criticized in recent years because of exorbitant fees, poor record keeping and refusing to work with families to restructure loan terms to help them avoid foreclosure. Because consumers have no opportunity to choose a new mortgage servicer, these companies have little incentive to treat their customers well.

The hope is that these new rules will make mortgage servicers more accountable to borrowers and will make it easier for struggling families to remain in their homes.

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Article provided by Wright Law Offices, P.L.C.
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