I wanted to take a moment to pass along information about the newly created Consumer Financial Protection Bureau’s proposed new rules for the mortgage service industry as it relates to information on outstanding balances and pending interest rate changes. I believe the proposed rules will positively impact the housing industry by allowing more people to stay in their homes and avoid foreclosure.
The rules, a first for the mortgage industry, would require servicers to respond to homeowners’ calls for information or complaints within five days. No such rules exist now. Prompted by the thousands of complaints from homeowners who have tried and failed to get information from their mortgage provider in an effort to avoid foreclosure, these new rules provide guaranteed timely access to this information.
Even though these new rules require banks to provide more one-on-one service rather than the automated service they currently provide, I consider this kind of service central to a positive housing recovery.
Among the proposed new rules:
- Servicers would have to send regular bills to homeowners each billing cycle that spell out payments of principal, interest, fees and escrow; the amount and due date of the next payment; and warnings about fees.
- Servicers would have to alert homeowners with adjustable rate mortgages that their interest rates are about to change as early as seven months before the changes kick in.
- Servicers would have to credit homeowners’ mortgage accounts the day the payment is received.
- Servicers would have to respond within 5 days of a homeowner’s request for information or complaint of errors.
These rules go into effect by next January, and I am confident that these rules will help homeowners stay better informed about their mortgages, will keep the foreclosure rate down, and help continue to drive home prices higher.