A proposal to arm homeowners with more information about their mortgages and potential alternatives to foreclosures is the aim of a new proposal laid out by the U.S. Consumer Financial Protection Bureau.
Our Louisville foreclosure defense lawyers understand that the proposal would apply to the entire mortgage servicing industry, one which has never before been regulated by such requirements. This is certainly part of what got us all into this financial mess in the first place.
The rules have been submitted for public comment. If approved, they would become effective Jan. 1, 2013.
Many homeowners would likely see it as a welcome reprieve because, despite a $25 billion national settlement that was reached among the five largest banks and attorneys general from 49 states earlier this year, some terms of that agreement have yet to be implemented. In fact, the Office of Mortgage Settlement Oversight reports that there have been over 1,000 complaints from homeowners who said their banks refused to work with them to negotiate a loan modification.
This is where having an experienced foreclosure attorney is critical. Cutting through the red tape is what we do. The banking and mortgage servicing industry is notorious for giving people the runaround and making it difficult to obtain a principal reduction on their loan. It’s more profitable for them to simply foreclose on it and find a new buyer – even if that takes months or years. In the meanwhile, we have millions of people losing their homes to foreclosure.
Part of the problem with the settlement that’s already been reached is that it doesn’t apply to all banks or mortgage servicers – only those five that signed on.
The new rules proposed by the federal government would apply industry-wide, and should help reduce the amount of bureaucracy involved. Still, if you’re about to lose your home, it’s wise to invest in an attorney who knows the system well and can help you navigate a positive outcome.
Essentially, the new guidelines would require greater transparency and create a legal framework requiring banks to work to keep people in their homes whenever possible.
Among the proposed rules are:
That mortgage bills sent each cycle would have to specifically show how much of the payments will address the principal balance, how much the homeowner is paying in interest, whether there are any fees and the amount of any escrow. Additionally, it would show the due date and amount of the next payment and an explicit warning about any fees for late payments.
Mortgage servicers would no longer be allowed to simply spring higher interest rates on borrowers. They would be required to inform homeowners of an adjustable rate as early as 7 months in advance.
A homeowner’s account would have to be credited on the same day the payment is received.
Mortgage servicers would no longer be allowed to bill borrowers for so-called “force-placed” insurance, unless the company has first notified the homeowner and additionally has reasonable proof that the insurance policy was dropped in the first place.
In the above scenario, if a homeowner can show their mortgage company that they in fact do have homeowners’ insurance, the servicer would have to end the force-placed insurance within two weeks and refund any fees paid.
If a homeowner requested any information or filed a complaint regarding certain errors, the mortgage company would be mandated to respond within five days.
If you need to speak to a Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.