CFPB to Propose Rules for Servicers to Tackle Problems

The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) is looking to propose mortgage servicing rules to keep borrowers from ""costly surprises"" and prevent servicers from giving customers ""the runaround.""

[IMAGE]

Lack of transparency and lack of accountability are the two issues motivating the new rules, and to create more transparency, the CFPB is considering the following as proposals: clear monthly mortgage statements, a warning before interest rates adjust, options to avoid ""force-placed"" insurance, and early information to keep customers out of foreclosure.

[COLUMN_BREAK]

To hold servicers more accountable, the bureau wants to see payments immediately credited to avoid late fees, up-to-date records that are accessible, quickly corrected errors, and easy, ongoing access to a foreclosure prevention team.

In recent years, the bureau said borrowers have complained that they did not receive the information needed to help avoid foreclosure.

The CFPB plans to propose the rules this summer and finalize them in January 2013.

David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA), said in a statement that the national standards have potential to create more confidence and certainty in the industry for borrowers and servicers, but offered a caveat.

""It is important that the final rules don't give preference to one business type over any other, nor should they inhibit innovation or discourage new companies from entering the marketplace,"" he said.

As the CFPB develops the rules, the bureau plans to engage with consumers and those in the industry.

In response to the financial crises, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB in July 2010. The bureau exists to protect consumers and has the authority to regulate financial institutions and write new rules.