Proposed Rule Expands Foreclosure Requirements
On November 20, 2014, the Consumer Financial Protection Bureau (CFPB) announced a proposed rule requiring mortgage servicers to provide additional foreclosure protections to certain borrowers. The 492 page proposal would amend Regulations X and Z.
The proposal includes the following changes:
- Expands the circumstances in which consumers would be considered successors to the legal interests in a home
- Servicers would have to provide foreclosure protections to borrowers who have made their loan current since the last loan mitigation application
- Servicers would be required to notify borrowers when a loss mitigation application is complete, making the borrower aware of the application status and possible protections
- Servicers would be required to provide a periodic statement to borrowers in bankruptcy Additional protections provided to borrowers when their loan is transferred to another servicer
- Clarification of steps servicers must take to protect borrowers from a wrongful foreclosure sale
- Clarification that delinquency under the servicing rules begins on the day a borrower fails to make a periodic payment
Comments are due by 90 days after the proposed rule is published in the federal register.
CLA’s financial institution regulatory compliance team assists banks and credit unions nationwide in establishing regulatory compliance programs, conducting compliance testing, and training staff on regulations. Justin Robinson is a member of CLA’s regulatory compliance team and can be reached at justin.robinson@CLAconnect.com.
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