The Consumer Financial Protection Bureau is working on new rules to increase both transparency and accountability in the mortgage-servicing industry. The rules would provide you with more clear and timely information about changes to your mortgage so you can avoid costly surprises.
Mortgage servicers are responsible for collecting payments on behalf of the owner of the loan. They also typically handle customer service, escrow accounts, collections, loan modifications, and foreclosures. In the majority of cases, consumers do not choose their mortgage servicer.
The CFPB points out that in recent years, many borrowers have complained that they did not receive the information they needed to help avoid foreclosure, while still other borrowers' situations worsened because it was difficult to get errors corrected or get answers from their mortgage servicers.
Richard Cordray, the CFPB director announced the proposed rules today at Operation Hope, a nonprofit that promotes financial literacy:
The mortgage servicing rules we are considering reflect two basic, common-sense principles—no surprises and no runarounds. For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress. It's time to put the 'service' back in mortgage servicing.
The CFPB plans to formally propose rules this summer and finalize them in January 2013. Before that time, the agency will seek comments from both businesses and consumers.
Related: Guard yourself against mortgage scams, and available to subscribers: Refinance your mortgage (again)?
Source: Consumer Financial Protection Bureau outlines borrower-friendly approach to mortgage servicing [CFPB]