Industry leaders warn of CFPB foreclosure rule’s ‘unintended consequences’

by Ryan Smith05 Aug 2016
The Consumer Financial Protection Bureau announced Thursday that it had finalized new measures designed to expand foreclosure protections – but industry leaders are already warning of “unintended consequences.”

The new rules require servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan. They also clarify borrower protections when the servicing of a loan is transferred and provide important loan information to borrowers in bankruptcy, according to a news release. “The changes also help ensure that surviving family members and others who inherit or receive property generally have the same protections under the CFPB’s mortgage servicing rules as the original borrower,” the release stated.

“The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon,” said CFPB Director Richard Cordray. “These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable.”

But the National Association of Federal Credit Unions said it intends to “thoroughly review” the 900-page final rule. The organization argues that the CFPB “did not give enough consideration to how the proposal would affect small entities, which did not participate in the behavior responsible for the financial crisis.”

“NAFCU will thoroughly analyze this 900-page final rule on mortgage servicing for its full impact on credit unions. At first glance, there appear to be a number of provisions that will substantially impact credit unions,” said NAFCU Director of Regulatory Affairs Alexander Monterrubio. “For example, the projected implementation dates for some portions of this rule are likely to coincide with credit unions’ ongoing compliance preparations under CFPB’s revised  Home Mortgage Disclosure Act rule. The HMDA rule changes alone will excessively tax the resources of many credit unions. We will continue advocate for the bureau to reach back and correct the unintended consequences that have resulted from its rulemakings.”

Most of the provisions of the final rule will take effect 12 months after publication in the Federal Register, according to the CFPB. The provisions relating to successors in interest and periodic statements to borrowers in bankruptcy will take effect 18 months after publication.
 

COMMENTS

  • by Joe the Lender | 8/5/2016 2:39:37 PM

    Such bullshit... While no foreclosure is ever good or wanted by anyone... The bottom line is simple. You signed a CONTRACT that says you agree to pay on the 1st day of the month, period. There is no if, and, or but. I'm sorry you got divorced, lost your job, or had a major medical issue. But how is that the lenders fault.

    Lenders take the risk and need to see a reward for the risk. Once the government steps in and makes these assine rules, you will see, and have already seen a pull back from lenders who simply view the rules and regulations no longer worth the risk.

    Be careful what you ask for Elizabeth Warren and the Democrats.

  • by DRJ | 8/5/2016 7:48:52 PM

    Millions of free $300k homes to those with no job, no credit and no integrity-in the interest of fairness and equality and to make home ownership more accessible (Clinton and Frank)! Now this. Skin in the game and on the line if we're going to lend you big bucks, with next to nothin down @ 3%-no brainer. What's next, communism (we all end up poor)?

  • by Deena | 8/5/2016 8:52:54 PM

    Obviously you haven't been paying attention, carry on!

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