It’s about time that the Consumer Financial Protection Bureau (CFPB) got its act together for consumers. On Tuesday, Director Richard Cordray announced that, by January 2013, there will be new rules in place that will protect borrowers by helping to avoid unknown costs and foreclosures.
Some of the new rules for servicers include:
• Issuing clearer mortgage statements monthly that will have an
itemized breakdown of payments by principal, interest and
• More disclosure for all borrowers from the servicers
• Explaining interest rates and how new rates are calculated,
when they come into effect, and warning of future charges and
penalties for paying mortgages off early
• Having to provide foreclosure counseling to those in need and
warn of changes in future interest rates and penalty fees
These new efforts are being put in place for myriad of reasons: to lessen the number of people facing foreclosure, to keep people in their homes, to monitor and lessen the incidences of “forced-placed” insurance (when the bank takes out property insurance for the homeowner), and to finally ensure the information on foreclosure documents are reviewed and correct to put an end to robo-signing.
Cordray said the new rules will ensure that consumers know at all times, “how much they owe, what they are paying, and how their payments are being applied.”
The new rules coincide with the decision made in February between the five largest mortgage lenders in the U.S. and some states attorneys general. The settlement deal they reached was that the mortgage lenders had to pay $25 billion to help those that faced or were currently in foreclosure.
Do you feel these new rules are enough to stop destructive practices by mortgage lenders? And are they coming too late?