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Mortgages

Proposed changes to our Mortgage Servicing Rules: New protections for surviving family members and other homeowners

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Today, we’re proposing changes to our Mortgage Servicing Rules, which took effect on January 10, 2014. These rules provide important protections for consumers with mortgages, including:

  • Requiring mortgage servicers (people who manage your mortgage loan account) to provide you with periodic mortgage statements or coupon books that give you important information about your mortgage.
  • Requiring servicers to respond quickly to written inquiries seeking information or requesting that they resolve potential errors about your mortgage.
  • Requiring servicers to reach out to you and send written information describing how to avoid foreclosure if you fall behind on your mortgage payments.
  • Requiring servicers to respond quickly to help you complete your application for loss mitigation options to avoid foreclosure. (Here’s more information about loss mitigation options.)

Since the Mortgage Servicing Rules went into effect, we’ve spent a lot of time talking to consumer advocacy groups, housing counselors, mortgage servicers, and trade associations, to better understand how the rules are working and whether we should make any changes to them. As a result, we’re now proposing some changes to the Mortgage Servicing Rules. The changes are intended to smooth the path for companies to better protect consumers and comply with the CFPB’s rules.

Expanded Protections for Surviving Family Members and Other Homeowners

Some of the most significant proposed changes would expand protections for people who inherit or otherwise receive property from a spouse, parent, or other relative when the mortgage has not been paid off. These homeowners include people who get the property after a loved one dies or in a divorce. They are often called “successors in interest.”

Our proposals regarding these homeowners would:

  • Provide a process for these homeowners to have their interest in the property reviewed and confirmed by the servicer; and
  • Give them the same rights to get information and correct mistakes about the mortgage loan and apply for loss mitigation options as other borrowers have under our rules, once the servicer reviews and confirms their interest in the property.

Loss mitigation applications

We’re proposing several changes to how servicers handle loss mitigation applications (that is, applications for loss mitigation options), including making your mortgage servicer tell you in writing when your loss mitigation application is complete, requiring servicers to gather information from third parties promptly to avoid delays, and clarifying protections for borrowers during servicing transfers and in the face of a foreclosure sale. We are also proposing that servicers would have to give you another opportunity to apply for a loan modification if, for example, you get a loan modification and bring the loan current, but then you fall behind again.

Get involved

Check out the proposed rule and send us your comments. We’ll update this post soon with a link to submit formal comments.

Social Security disability income shouldn’t mean you don’t qualify for a mortgage

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More than 15 million people receive Social Security disability income every year. For those relying on this income, qualifying for a mortgage can unfortunately become a challenge when lenders ask for proof of how long they will receive their benefits.

Today, we’re reminding lenders that placing unnecessary documentation requirements on recipients of Social Security disability income, including disabled veterans, may raise fair lending concerns. Following the guidelines and standards noted in the bulletin may help lenders comply with fair lending laws.

Difficult to prove your income

Generally, when you apply for a mortgage, you must show to mortgage lenders that you have a stable income. However, those who depend on Social Security disability income usually don’t have any documentation saying how long this income will continue. The Social Security Administration (SSA) normally only provides proof that consumers are currently receiving benefits.

Unfortunately, some consumers have reported that loan officers have asked them for a specific description of their disabilities or a statement from a doctor to prove that their Social Security disability income is likely to continue.

What our rules require

To verify income for Qualified Mortgage debt-to-income ratios, our rules require lenders to look at whether the SSA benefit verification letter or equivalent document includes a defined expiration date for payments. Unless the SSA letter specifically states that benefits will expire within three years of loan origination, lenders should treat the benefits as likely to continue.

Similar standards

The Department of Housing and Urban Development (HUD) has a similar standard for documenting income for FHA-insured mortgages, and emphasizes that a lender shouldn’t ask a consumer for documentation or about the nature of his or her disability under any circumstances.

The Department of Veterans Affairs (VA) allows lenders to use Social Security disability income as qualifying income for VA-guaranteed mortgages and emphasizes that it’s not necessary to obtain a statement from the consumer’s physician about how long a medical condition will last.

Fannie Mae and Freddie Mac have issued similar guidelines for loans that are eligible for their purchase, allowing consumers to use Social Security disability benefits as qualifying income for a mortgage.

Everyone deserves to qualify based on their income

Persons with disabilities should be able to qualify for mortgages they can afford based on their stable income, including from Social Security disability income. And anyone with disabilities, including disabled servicemembers, should not be prevented or hindered from buying a home by unnecessary barriers or requirements.

Together, these standards and guidelines should help lenders avoid unnecessary documentation requests and help individuals who receive Social Security disability income receive fair and equal access to credit.

Submit a complaint

If you are having an issue with a financial product or service, you can submit a complaint online or call (855) 411-CFPB. We can assist people in over 180 languages. We’ll forward your issue to the company, give you a tracking number, and keep you updated on the status of your complaint.

Know Before You Owe: Proposed updates to TILA-RESPA final rule

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Nearly a year ago, we issued the TILA-RESPA Integrated Disclosure Rule. Many of you know this work as Know Before You Owe and we’ve been talking about it for a while now.

Today, we’re issuing a proposal to modify and make technical amendments to this rule. The rule introduced new, easier-to-use mortgage disclosure forms that clearly lay out the terms of a mortgage for consumers. The new Loan Estimate and Closing Disclosure mortgage forms will replace the existing federal disclosures and help consumers understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.

Proposed changes

There are two issues we’re addressing in today’s proposal.

First, we’re proposing to give creditors some extra time to provide consumers with revised Loan Estimates after a consumer locks a floating interest rate. Under the current rule, when consumers lock their interest rates, creditors are required to give them a revised Loan Estimate the same day. After considering feedback from stakeholders on this requirement, we think that such a short turnaround may be challenging for creditors that currently allow consumers to lock interest rates late in the day or after business hours. This could result in creditors only allowing consumers to lock interest rates during business hours or even early in the day (e.g., before noon). We’re proposing to give creditors until the next business day to provide the revised disclosures, which we believe should provide creditors with enough time to provide new disclosures without having to reduce flexibility that consumers may have today in locking their rates.

Second, we’re proposing a minor addition on the Loan Estimate form. Construction loans often take longer to settle than other loans, and the estimated charges can change when more than 60 days pass. Our proposal would create a space on the Loan Estimate form where creditors could include language informing consumers that they may receive a revised Loan Estimate for a construction loan that is expected to take more than 60 days to settle.

We determined that these issues are important and may significantly affect implementation planning and decisions.

Throughout the Know Before You Owe project, feedback has been an important part of the process. This step is no different. We welcome your comments on this proposal, so submit them by November 10, 2014.

Effective date

The effective date for the TILA-RESPA rule is still August 1, 2015. We’re proposing these changes now so that there’s plenty of time to consider these changes while implementation decisions are being made, and we do not think that the proposed changes will affect the industry’s ability to implement the rules on time.

Implementing the rules

As part of our work to support the implementation of our rules, we have regulatory implementation resources available including compliance guides, sample Loan Estimate and Closing Disclosure forms, and a calendar showing timing requirements based on a sample real estate transaction.

Updated on October 29, 2014 to include a link to submit official comments.

Updated reverse mortgage guide: Two things you should know

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More and more homeowners are considering tapping their home equity as they approach retirement age. Getting a reverse mortgage is one way that some older homeowners can do that. Reverse mortgages are a special type of home equity loan sold to homeowners aged 62 years and older, which are repaid when the borrowers sell the home, move out, or die. It’s a complicated type of loan that works best for homeowners who carefully consider all of their options.

Things to consider

Before borrowing, seniors and their families should consider:

  • The cost of homeowners’ insurance and taxes
  • Plans for staying in the home or leaving it to family members
  • Plans for dependents or others living in the home
  • Alternatives to reverse mortgages

Because some important things about reverse mortgages have changed recently, we’ve updated our guide to reverse mortgages.

First-year payout limits

One of these changes limits the amount of money you can draw from your loan in the first year. Borrowers often get into trouble by taking a lump-sum payment early on. It may feel great to get a big payment up front, but borrowers can outlive this money – which spells financial trouble for borrowers who live longer lives.

This limit encourages borrowers to make their money last longer. Borrowers can still take out lump-sum single payments – but this is still a risky choice. Borrowers should strongly consider the monthly payment or line of credit options before choosing to get a lump-sum. These options provide more long-term security than lump-sum payments.

Protections for non-borrowing spouses

Another important change is for couples considering a reverse mortgage. In the past, couples who took out a reverse mortgage loan in the name of only one spouse ran into trouble when the borrowing spouse passed away. When a borrower died, the “non-borrowing spouse” had to pay back the reverse mortgage or move out. Many surviving spouses were surprised to learn this, and lost their homes. With recent changes, a non-borrowing spouse may be able continue to live in the home under certain conditions, even after the spouse who signed the loan passes away. However, the non-borrowing spouse will still stop receiving money from the reverse mortgage after his or her spouse dies.

For couples considering a reverse mortgage, borrowing together makes more sense. If both spouses sign the reverse mortgage, then the surviving spouse can continue to receive monthly payments or use an existing line of credit. It also ensures that a surviving spouse may live in the home after his or her spouse (co-borrower) dies.

These changes help protect reverse mortgage borrowers, but make no mistake—reverse mortgages are still not right for everyone and can be risky and expensive. If you’re considering a reverse mortgage, get the information you need to make an informed decision and give yourself time to weigh your options.

Check out our guide to reverse mortgages for older homeowners and their families.

Updated mortgage data available

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Last year, we released a web-based tool that provides the public with easier access to mortgage data for 2007 through 2012. Today, we’re updating the database with 2013 data, in coordination with the Federal Financial Institutions Examination Council.

What’s HMDA?

The Home Mortgage Disclosure Act or HMDA requires many financial institutions to maintain, report, and publicly disclose information about mortgages. HMDA data for 2013 included approximately 17 million records from 7,190 financial institutions.

Get started

If you’re new to HMDA data, start with our introductory video. You’ll learn about the data, how it’s collected, why it’s useful, and what variables it contains. Then, check out our maps and charts.

Explore the data and do your own analyses. You can start with our suggested filters, and then customize them to fit your needs. Use the summary tables to compare data across state, loan type, and more. Want a chart? You can create a summary table and then download it to create a chart using your favorite software.

Share your findings

We’re excited to see what you do, and encourage you to explore the data. Leave us a comment with your ideas or use #cfpbdata on Twitter to share what you find.

El administrador de negociación del National City Bank pronto se pondrá en contacto con los prestatarios elegibles

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El año pasado, presentamos, junto con el Departamento de Justicia, una queja contra el National City Bank (National City) por discriminación en los precios de los préstamos hipotecarios. La queja alegaba que el National City había cobrado a los prestatarios afroamericanos e hispanos precios más altos por sus préstamos hipotecarios que a los prestatarios blancos con capacidad crediticia similar entre 2002 y 2008. Un tribunal federal ordenó al PNC Bank, que compró al National City en 2009, proporcionar $35 millones en alivio a los prestatarios minoritarios que pagaron en exceso.

El Administrador del Mandato Consentido del National City localizará y enviará cheques a los prestatarios minoritarios que recibieron cargos en exceso. Durante las próximas dos semanas, el Administrador enviará paquetes de información a todos los prestatarios elegibles invitándoles a participar en el arreglo legal. Si usted fue sometido a cargos excesivos y es elegible, usted recibirá un paquete informativo diciéndole específicamente qué cantidad de dinero recibirá por mínimo. La cantidad real de su pago puede ser mayor, según el número de prestatarios que aceptan participar en el arreglo legal.

Envíe su formulario

Los paquetes enviados incluirán un formulario que usted debe firmar si desea recibir su pago. Puede devolver este formulario de participación por correo con franqueo prepago, por correo electrónico o por fax. Simplemente siga las instrucciones del formulario. No olvide enviar su formulario a más tardar el 21 de octubre de 2014. Sólo los consumidores elegibles que devuelven sus formularios a más tardar el 21 de octubre de 2014 recibirán pagos.

Si usted no recibe un paquete informativo por correo antes del 30 de septiembre, y cree que debería recibir un pago, llame al Administrador del Mandato de Consentido de National City al (866) 523-6751 para preguntar sobre su elegibilidad. También puede llenar un formulario de elegibilidad para reclamación y enviarlo por correo, correo electrónico o fax.

La participación en el arreglo legal es gratuita

Manténgase en alerta de estafadores alegando que le ayudarán por una comisión o pidiendo información personal con el fin de obtener su cheque. Cuando un gran número de consumidores recibe dinero de un arreglo legal es cuando a veces aparecen los estafadores. El estafador puede tratar de cobrarle una cuota o de robar su información personal. Si bien usted está en libertad de hablar con un abogado, no necesita contratar a un abogado ni pagarle a nadie para poder participar en este arreglo legal.

Como parte de este arreglo legal, el Administrador del Mandato Consentido del National City, la Oficina para la Protección Financiera del Consumidor, el Departamento de Justicia o su oficina del Fiscal de EE. UU. local podrían ponerse en contacto con usted. Cualquier otro intento de contacto que afirme estar relacionado con este arreglo legal debe ser tratado como una estafa. Por favor, informe de inmediato cualquier estafa al Administrador del Mandato Consentido del National City llamando al (866) 523-6751 o por correo electrónico al: info@NationalCityConsentOrder.com.

¿Tiene más preguntas?

Si tiene preguntas, consulte el sitio web del Administrador del Mandato Consentido del National City o llame al (866) 523-6751.

Obtenga más información sobre cómo puede protegerse de la discriminación crediticia.