New consumer protection rules on tap for mortgage servicers
The new federal consumer watchdog agency is slated to announce today that it's considering several new rules aimed at increasing transparency and accountability in the scandal-ridden mortgage-servicing industry, The Washington Post reports. The rules would require mortgage servicers to warn homeowners before any interest rate adjustments, provide options for delinquent borrowers to avoid foreclosure, investigate errors within 30 days, and improve staff accessibility to consumers, among other actions. The Consumer Financial Protection Bureau is seeking business and public comment before formally proposing the rules, which are expected to be finalized by next year. CFPB Director Richard Cordray is scheduled to unveil the plan for regulation during a speech today at Operation Hope, a nonprofit group focused on financial literacy. In a prepared statement, he calls the initiative "common sense." "For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress," Cordray says. "It's time to put the 'service' back in mortgage servicing." Mortgage servicers collect monthly payments from borrowers as well as handle consumer inquiries, loan modifications and foreclosures. The industry has come under fire for widespread examples of forged and shoddy paperwork. Five of the largest bank-run mortgage servicers agreed to a $25 billion settlement with state and federal agencies earlier this year over the issue, making it the largest corporate payout since the tobacco industry settlement in the 1990s. Read the full story here.
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