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

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.

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