Yesterday the Consumer Financial Protection Bureau announced tighter rules for mortgage service companies, the companies that collect mortgage payments on behalf of lenders. The move was authorized by Congress in 2010 and spurred on by settlements with five major banks earlier this year over foreclosure issues that included forged signatures and lost paperwork. The banks were required to pay $26 billion in settlement fees.
The New York Times reports that the new rules “require the service companies to provide monthly statements to customers, warn them before interest rates are adjusted and offer more options to avoid foreclosures.” The Times quoted CFPB director Richard Cordray as saying, “The major failures in this industry demonstrate that all servicers need to meet basic standards of good customer service…these proposed rules are about putting the service back in mortgage servicing.”
The proposed rules are open for public comment until October 9 and the final rules will be issued in January 2013. They cover “clear and timely” information, a procedure for correcting errors, and requirements that the service companies make good-faith efforts to notify delinquent borrowers of their options to avoid foreclosure.
Read more here at The New York Times.