MORTGAGES

Federal agency plans regulations on servicing of mortgages

THE AGENCY Consumer Financial Protection Bureau

THE ISSUE When consumers take out a mortage, the lender often turns it over to a servicing company that administers the loan. Servicing companies have faced criticism for such things as robo-signing of foreclosure documents and losing materials from borrowers who are seeking changes to their loans, the agency said. New rules are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

WHAT’S PROPOSED A series of regulations over mortgage servicing will help consumers by eliminating surprises and putting “service” back in mortgage servicing, the agency said.

Mortgage-servicing companies would be required to provide:

- Easy-to-understand billing statements that include the amount due and ways previous payments were applied to the loan.

- Adequate warning of changes in payments or interest rates and more information about what consumers can do if they can’t afford the increased payments.

- Quick responses to borrowers wanting to know the amount needed to pay off a mortgage.

- Prompt credit when a payment is received and clearer information about how partial payments are handled.

- Protection for consumers when a company plans to buy insurance on the property if it thinks the borrower’s insurance has lapsed. Borrowers would have to be notified twice before forced insurance is permitted.

- Early notification from servicers by telephone for consumers who are delinquent on payments by at least 30 days.

- Easy access to servicing staff when consumers are behind on their payments.

- Foreclosure options, including permitting consumers to appeal denials of loan modifications and delaying foreclosures if a borrower’s appeal is pending or the borrower is following a loan-modification agreement.

HOW YOU CAN BE HEARD The deadline for comments is Oct. 9. Comments should be identified by the Docket No. CFPB-2012-0033 or RIN 3170-AA14 and include the agency name: Consumer Financial Protection Bureau. Comment electronically at www.regulations.gov or by mail to Monica Jackson, Office of the Executive Secretary, Bureau of Consumer Financial Protection, 1700 G Street, NW, Washington, D.C., 20552.

TO LEARN MORE Go to the Consumer Financial Protection Bureau at www.consumerfinance.gov.