The Consumer Financial Protection Bureau (CFPB) announced on Wednesday a proposal to revamp its mortgage servicing rules, aiming to streamline the process for struggling homeowners to access forbearance and other relief options. This initiative draws on lessons learned from the COVID-19 pandemic to improve the efficiency and accessibility of borrower assistance.
CFPB Plan To Streamline Mortgage Servicing Rules : Simplifying Borrower Assistance
The CFPB issued a notice of proposed rulemaking to “streamline” existing servicing rules, focusing on borrower assistance. Key changes include relaxing paperwork requirements, which would grant borrowers and servicers more flexibility to begin pursuing foreclosure alternatives sooner. This nearly 200-page proposal aims to make it faster and easier for homeowners to get the help they need.
Prohibition of Dual Tracking
The proposal also seeks to prohibit dual tracking during the assistance process. Under these changes, mortgage servicers would be barred from proceeding to foreclosure until all assistance options have been reviewed and exhausted, or until the borrower stops communicating. Additionally, the proposal would limit the fees that delinquent borrowers can be charged while they work on assistance options.
CFPB Plan To Streamline Mortgage Servicing Rules : Incentivizing Quick Action
According to the CFPB, the goal is to give servicers “strong incentives” to act quickly when borrowers seek assistance, while also removing regulatory hurdles that can hinder the provision of relief to prevent foreclosure. CFPB Director Rohit Chopra emphasized the benefits of these changes in a statement.
