The Consumer Financial Protection Bureau plans to propose a straightforward approach to loan administration that should benefit consumers and servicers, which are the firms that loan owners hire to collect payments, disburse taxes and insurance, and chase after delinquent borrowers.
The fledgling bureau, which is not yet a year old, will propose the new rules this summer and expects to put them in place in January. Servicers could be given up to a year to make the final rules a part of their routine, which means consumers may not see the benefits until about January 2014.
“For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress,” said Richard Cordray, the former Ohio attorney general who heads the young agency. “It’s time to put the ‘service’ back in mortgage servicing.”
Even before the housing crisis and mortgage meltdown, consumers reported issues with sloppy record-keeping and unresponsive servicers. And because lenders, not homeowners, choose the servicers, those companies had little incentive to actually serve borrowers.
If the servicer is indifferent to your problem, the results can be disastrous. It can harm your credit, obliterate your finances and possibly even lead to foreclosure, all through no fault of your own.
The rules the Consumer Financial Protection Bureau is considering are aimed at tackling what it sees as two underlying issues — the lack of transparency and the lack of accountability. Its goal is “no surprises.” Borrowers, the bureau believes, should not be kept in the dark, nor should they be given the runaround.
Here’s a brief look at what the agency has in mind:
•Understandable monthly statements
•Rate adjustment warnings
Will this increase the transparency of the mortgage industry?