Consumer bureau unveils proposed mortgage regulations
The U.S. Consumer Financial Protection Bureau (CFPB) proposed new regulations today that would revamp how American homeowners interact with mortgage servicers, Bloomberg reported.
One set of rules aims to provide homeowners with clearer, timelier information about changes to interest rates and options for avoiding foreclosure. A second set of rules requires servicers to credit payments promptly, correct errors, stay accessible and limit foreclosures if homeowners are working on loan modifications.
The bureau is seeking public comment on the proposals by Oct. 9 and will finalize them by January 2013.
The regulations would cover major bank servicers, such as Bank of America Corp., and special servicers, such as Ocwen Financial Corp., which process problem loans.
Isaac Boltansky, an analyst with Compass Point Research & Trading LLC, said in a research note that the new rules would support a “secular shift in the mortgage servicing industry” away from big banks toward specialty servicers like Ocwen.
“We expect the big bank servicers to offload a sizable portion of their servicing assets,” Boltansky wrote.
The new regulations go beyond the standards for mortgage servicing that state attorneys general wrote into a court settlement reached with major banks on March 12, according to a senior CFPB official who briefed reporters on condition of anonymity. For example, the CFPB proposal requires servicers to acknowledge receipt of complaints or information requests within five days and respond to the borrower about the inquiry within 30 to 45 days.