New consumer protection rules help prevent foreclosure
Mortgage servicers have until January of 2014 to come into compliance with some bold new consumer protection rules. The new regulations come courtesy of the Consumer Financial Protection Bureau, a new agency that regulates the banking industry on behalf of the average borrower.
New regulations require a series of changes that will help transform the way mortgage servicing companies deal with past-due borrowers. Under past, most lax regulation, billing statements were unclear, bank record keeping was not always accurate, and homeowners faced a mountain of confusing bureaucracy and poor internal communication when they tried to negotiate with the bank to adjust loan terms and stay in their homes.
Now, banks are required to start by changing their billing statements to be easier to read, with clear information about how much of the payment being made will go towards interest, fees, and the principle amount of the loan. In addition, the statements will also have clearer information about the status of past due payments and will warn borrowers much earlier when they are at risk for a foreclosure. Mortgage servicing companies will also be required to keep more accurate, up-to-date information on each account, ensuring that payments are properly credited and that collections calls and notices are made in error.
For borrowers who are behind or struggling to keep up with payments, mortgage servicing companies will now be required to provide a single form that borrowers can use to apply for a loan modification.
This will be a welcome relief for distressed borrowers in Atlanta who are looking for a way to stay in their homes and preserve their credit.
Source: Reuters, “U.S. consumer bureau issues rules to clean up mortgage servicing,” Emily Stephenson, Jan. 17, 2013.
Information about how Georgia borrowers can stop foreclosure is available on our website.