Will plan put the 'service' back in 'loan servicing'?
The new Consumer Financial Protection Bureau is proposing new rules for how mortgage servicers deal with borrowers. Will it make them more accountable?
The new Consumer Financial Protection Bureau is proposing rules the agency hopes will help the country avoid another housing crisis.
While we don't see anything that will keep your home from losing 50% of its value, the bureau is proposing a radical overhaul in how loan servicers deal with customers.
Adding a little customer service to mortgage servicing is part of the plan.
"The mortgage servicing rules we are considering reflect two basic, common-sense principles – no surprises and no runarounds," CFPB Director Richard Cordray said in a news release. "For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress. It's time to put the 'service' back in mortgage servicing."
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The new rules are in response to complaints about how lenders deal with their customers. The bureau wants loan servicers to, at a minimum, post payments when they are received, warn borrowers when interest rates are about to rise and explain options before adding expensive
Congress mandated that the new rules be drawn up. The CFPB will formally propose specific regulations this summer, ask for public comment and enact final rules in January.
The CFPB says the new rules are aimed at two problems: lack of transparency and lack of accountability.
"In recent years, many borrowers have complained that they did not receive the information they needed to help avoid foreclosure," the CFPB writes. "Other borrowers’ troubles worsened because they found it difficult to get answers from their servicers, or get errors corrected when they occurred."
These are among the proposed rules:
- Clear monthly mortgage statements.Servicers would have to send regular statements that show how payments break down into principal, interest, fees and escrow. If borrowers are behind, the notices should give them information about how to avert foreclosure.
- Warnings before interest-rate adjustments.Borrowers with adjustable-rate loans should be told when the rate will change and what to do if they can't afford the new payments.
- Ways to avoid expensive "force-placed" insurance. The rule would require advance notice and pricing information.
- Information on ways to avoid foreclosure.Servicers would have to try to contact borrowers in danger of foreclosure and advise them of their options. Plus, if the borrower calls the lender, the servicer would have to provide "timely, complete and accurate information" about options.
Just as a refresher, The Associated Press explains the role of the mortgage servicer:
A mortgage servicer collects payments from the borrower on behalf of a loan's owner and typically handles customer service, escrow accounts, collections, loan modifications and foreclosures. Most borrowers do not choose their mortgage servicers. The owner of a loan frequently is not the original lender, even when the original lender is the servicer.
What do you think? Would these rules help?
Don't forget people, that god is in control of everything he will deal with wrong doing people also the one's that has been stealing and wrongfully kicking people out of there homes, so dont depend on the banks keeping you in your homes know that god will if you ask him....
For those of you who think it is all about jobs and Obama and banks, try this,
America got in the habit of outsourcing work to other countries way back in the 70's. As a result we have had to prop up our GDP with something. For a while we had mining,steel,oil,fishing, etc etc.
That changed, as all things do, and we had a strong manufacturing base along with our natural resource programs.
Then we got into high tech and found out that our manufacturing could be done cheaper, so we lost most of the manufacturing base. Well, what else do we have? Oh, we have land and construction.........and the end result was people who wrote loans and mortgages to those people who didn't even have enough income to buy food, and the bottom dropped.........
Some of this is the banks fault, but, WE are all guilty of it to. WE all thought the growth and super economy would continue. Even when it started to fall the public disregarded the signs and continued to over-spend and over-extend right up to the full blow out.
There really is no way to stop this kind of thing, but, if there was another entity to draw on for our GDP the crash would not have been as bad.
To correct we need to match every industry equally with another industry, i.e. auto industry and metal production and foundries IN THE SAME COUNTRY!
More laws and regulations just add to MORE screw-overs and more fraud.
The more you tighten you grip the more things slip through your fingers.
of course everyone wants to pay there bills on time, but when you have lost your job and looking very hard for another, what are you suppose to do dummy ( ruth) you may not be in foreclosure, but it's a lot of us that have been through it....don't speak to soon about paying your bills on time because what goes around will come back around to you!!! smh
Total BS and avoidance of the REAL problem; a loan is a loan, no secondary markets, no jewing-and-screwing on wall street. no derivatives and no more 'financial innovation'.
no government guarantees, no more bailouts. a loan is a loan.
bad loans? lose money!
For the record, I am not near foreclosure. Sorry a little long but here is my official complaint with the Consumer Financial Protection Bureau. So far no word back yet. Maybe if enough people want action, something tangible will change.
Describe what happened so we can understand the issue...
In early February 2012, I spoke with Steven, mortgage specialist from my personal bank, US Bank. I inquired about HARP refinancing for my existing loan through Wells Fargo. He advised me to go through Wells Fargo as it might save me appraisal fees. Otherwise, I should call him back if he can help me further. He gave me the number for Anne, a Wells Fargo mortgage rep. After several calls, she informed me that my loan did not qualify for he HARP program but she could help me with a conventional loan. Apparently, she contacted Steven and told him I did not qualify as he left a voicemail on my cell phone indicating he knew that I did not quality but I should call him because he will beat Wells Fargo’s prices A contact with Ryan, Wells Fargo in Baraboo, WI, had similar results. I also contacted Gregory from Wells Fargo via email. At first he indicated I did qualify but in later emails informed me I did not. He informed me the HARP program was coming out with new qualifying loans March 19 and I should contact him then, which I did. I did not hear from any of them again. On March 22 I contacted Mike, a Wells Fargo mortgage rep from the 800 number. He said my loan did not qualify. He also stated that he had 2 calls yesterday with the exact same situation. When I pressed for more explanation, he commented “It looks like this is up to our discretion.” I asked what he meant by that. He then stated that my PMI company, Genworth, did not participate in HARP. He said he would need to do some more research and call me back. He did not. On 3/22 I spoke with Sara from Genworth and she indicated they fully participate and that you can even apply on-line to speed the process. On 3/26 I called Wells Fargo and spoke with Jerry who said my loan did not qualify. After questioning further, he stated it was due to Genworth. When I told him I had spoken with Genworth he transferred me to Nicole in customer service who transferred me to Josh, Home Consultant Specialist with Wells Fargo. After explaining the situation, Josh stated that there was nothing he could do for me. I then specifically asked him, even though my loan qualifies under HARP and Genworth, Wells Fargo is choosing not to let me participate in this federal program. He replied yes and he cannot provide me with any assistance and that I should call back in a month. I believe Wells Fargo is preventing me from participating in a federal program for which I qualify and they have conspired with at least one other bank to prevent my access.
I would like Wells Fargo to cease their deceptive practices and be held accountable for providing misleading and fraudulent information to consumers. I would like to participate in a federal program for which I am qualified at the benefit level I otherwise would have if not for their widespread, dishonest tactics.
We have received your complaint (Case number: *******************) and will send it to your company as soon as possible.
You can track your complaint at: **************************
In the meantime, if you’re having trouble paying your mortgage and want to be connected to a free, HUD-approved housing counselor, call (855) 411-CFPB. Special assistance may be available to military members or veterans.
Consumer Response Team
Consumer Financial Protection Bureau
(855) 411-CFPB (2372)
I was forced to pay for insurance I didnt want-and when I needed it they gave me the run around-house got forclosed on-cause the lender sold the note and refused my payment. 8 months after loseing the house (to what I was told was illegal) they are still charging me for insurance.
the lender would never answer my calls and even when I had an agreement in place-they didnt hold up to their end. My house sold for 180k less then what I paid-and the price it sold for-I could have handled the payments-now I am homeless, jobless (and thanks to the libaray for internet) have very few places to take my family. this system should have been fixed years ago-or at least have them follow the exisiting rules that are currently in place.
regulation stifles free enterprise
we now live in a socialist state
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.