The


Consumer
Financial
Protection
Bureau
(CFPB)
on
Wednesday

announced
a
newly
proposed
rule
that
would
amend
Regulation
X
and
require

mortgage
servicers
to
emphasize
borrower
assistance
and

loss-mitigation
options
over

foreclosure
when
a
borrower
struggles
to
make
their
required
mortgage
payments.

“The
proposed
changes
would
also
make
it
simpler
for
servicers
to
offer
assistance
by
reducing
paperwork
requirements,
improve
communication
with
borrowers,
and
ensure
critical
information
is
provided
in
languages
borrowers
understand,”
the
bureau
explained
in
its
announcement.
“The
CFPB
is
requesting
comment
about
several
other
topics,
including
possible
approaches
it
could
take
to
ensure
servicers
are
furnishing
accurate
and
consistent
credit
reporting
information
for
borrowers
undergoing
review
for
assistance.”

CFPB
Director

Rohit
Chopra
said
the
move
is
being
made
in
an
effort
to
more
aggressively
stand
against
preventable
instances
of
foreclosure.

“When
struggling
homeowners
can
get
the
help
they
need
without
unnecessary
obstacles,
it
is
better
for
borrowers,
servicers,
and
the
economy
as
a
whole,”
Chopra
said
in
a
statement.
“The
CFPB’s
proposal
would
reduce
avoidable
foreclosures
and
make
the
mortgage
market
more
resilient
during
future
crises.”

The

Mortgage
Bankers
Association
(MBA)
and

American
Bankers
Association
(ABA)
released
a
joint
statement
that
praised
the
plan.

“We
have
long
advocated
for
modernizing
the
loss
mitigation
framework
under
Regulation
X
and
appreciate
the
Bureau’s
efforts
to
simplify
and
streamline
the
process,“
the
statement
read.
“Servicers
have
helped
more
than
eight
million
families
stay
in
their
homes
since
the
beginning
of
the
COVID-19
pandemic
while
adapting
to
new
and
rapidly
changing
loss
mitigation
programs
implemented
by
government
agencies.

“…
The
Bureau’s
proposal
represents
a
substantial
overhaul
of
the
current
framework,
and
we
hope
they
will
take
into
careful
consideration
the
recommendations
and
feedback
from
our
members
who
are
serving
millions
of
borrowers
every
day.
We
look
forward
to
reviewing
the
specific
details
of
the
proposal
—
including
the
items
pertaining
to
Limited
English
Proficiency
—
to
ensure
any
updated
framework
is
operationally
feasible
and
does
not
negatively
affect
consumers.”  

The
newly
proposed
rule
has
four
key
components:
to
stop
dual
tracking
and
limit
fees
—
which
requires
an
emphasis
on
borrower
assistance
before
initiating
a
foreclosure
and
limiting
fees
levied
by
the
servicer
as
borrowers
explore
loss-mitigation
options;
reducing
paperwork
requirements
so
that
servicers
can
assess
borrower
needs
more
quickly
without
a
“complete
application”;
requiring
more
tailored
communication
notices
to
borrowers
so
that
potential
action
on
their
part
is
more
clearly
defined;
and
more
flexibility
on
the
languages
in
which
borrowers
can
receive
notices.

In
2022,
the
bureau
requested
public
comment
regarding
“ways
to
reduce
risks
for
consumers
who
experience
disruptions
in
their
financial
situation
that
could
interfere
with
their
ability
to
remain
current
on
their
mortgage
payments,”
adding
that
feedback
from
both
the
mortgage
industry
and
the
wider
public
emphasized
a
need
for
simplification
and
flexibility
in
the
loss-mitigation
process.

The
bureau
also
related
that
it
gained
positive
feedback
about
loss-mitigation
options
made
available
to
borrowers
during
the

COVID-19
pandemic,
when
the
CFPB
adjusted
its
rules
to
“permit,
temporarily,
borrowers
to
receive
assistance
without
comprehensive
review,
even
when
the
result
was
a
year-long
payment
pause
or
a
permanent
change
to
the
loan
terms.”

The


Housing
Policy
Council
(HPC)
also
released
a
statement
in
support
of
the
new
proposal.

“[HPC]
appreciates
the
CFPB’s
announcement
of
proposed
updates
to
the
mortgage
servicing
regulations.
This
effort
is
well
overdue,”
the
organization
said.
“For
years
now,
the
industry
has
been
requesting
that
the
Bureau
adopt
sensible
revisions
to
Reg
X,
to
align
the
rules
with
government
agency
and
GSE
loss
mitigation
program
improvements.
Thus,
we
welcome
the
CFPB’s
recognition
that
it
is
time
for
the
Bureau’s
Reg
X
to
match
and
reinforce
these
efforts,
so
that
the
Bureau’s
servicing
rules
support
the
successful
foreclosure
prevention
work
performed
by
servicers.”

HPC
also
cited
the
loss-mitigation
efforts
undertaken
during
the
pandemic,
echoing
the
CFPB’s
contention
about
prior
public
comments
it
has
received.

“At
the
outset
of
the
COVID
pandemic,
industry
and
government
officials
worked
together
with
a
common
goal
of
helping
homeowners
and
this
collaboration
sent
a
powerful
message
to
those
in
need,”
HPC
said.
“Homeowners
are
apt
to
trust
both
industry
and
government
more
when
the
private
and
public
sectors
are
seen
as
working
together,
to
promote
and
protect
the
rights
of
consumers
and
lenders
alike,
in
a
fair
and
balanced
way.”

Commenters
during
the
2022
feedback
period
highlighted
that
borrowers
and
servicers
alike
benefited
from
these
practices,
encouraging
a
more
permanent
approach
to
foreclosure
assistance
in
the
future.

Comments
on
the
new
proposal
are
due
by
Sept.
9,
2024,
and
can
be
submitted
through
the

CFPB’s
website.

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