February 11, 2013
New Mortgage Rules to Start in Jan 2014
This past January, rules were finalized that aim to protect homeowners from unexpected charges and runaround services from the companies that collect their mortgage payments.
According to the Consumer Financial Protection Bureau (CFPB), starting in January 2014, mortgage companies will be required to warn borrowers before there is a hike in their interest rates. They will also be required to help borrowers actively avoid foreclosure, provide clear monthly billing statements, and to promptly credit payments, correct errors, and keep better internal records.
The monthly billing statements that these companies will provide are required to list information such as the amount of the payment that is going toward down principal, interest, and fees. And, if an interest rate is about to adjusted, the borrower will receive an estimation of the new amount, and will be allowed to consider refinancing.
There will also be an end to “dual-tracking,” or seeking foreclosure on a borrowers’ home, while simultaneously trying to arrange a loan modification.
As discussed in a previous blog post, these changes are part of a larger reform of mortgage regulations that were put into place in 2010 to eliminate the previous industry practices that flourished after the housing bust in 2008. The CFPB was created by Congress to rewrite these rules.
CFPB Director Richard Cordray stated that these new rules will “provide a fairer and more effective process for troubled borrowers who face the potential loss of their homes.”