The Consumer Financial Protection Bureau, on January 17, 2012, established new protective procedures related to homeowners whose homes are going into foreclosure. These new rules further regulate the conduct of mortgage servicing organizations.
The purpose of the new rules, according to Richard Corday, the director of the Consumer Financial Protection Bureau, are to ensure a fair treatment for all borrowers. In addition, these rules intend to establish further protection for those individuals trying to save their homes. The intent of these new regulations is to only allow mortgages to be made to prospective homeowners who have the capability of a repaying these loans.
Missing Mortgage Payments
If the homeowner misses two consecutive mortgage payments, going forward, the mortgage servicing organization will have to provided the homeowner with information about alternatives to foreclosure
Loan Modifications
If the homeowner submits a loan modification the financial institution will no longer be able to initiate a foreclosure proceeding until all aspects of the processing of the mortgage modification are completed. Banks will no longer be able to bring foreclosure proceedings unless the loan is a more than four months behind.
Even in the event a home is scheduled to be sold in foreclosure, the homeowner can still submit a mortgage modification application as long as it is 37 days prior to the sale of the home. This will also force the foreclosing financial institution to stop the foreclosure sale from going forward until the mortgage modification is fully processed and it is dealt with. It should be noted, customer service processing organizations that service less than 5000 mortgages are exempt from some of the new rules.
