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Health & Fitness

WORRIED ABOUT KEEPING YOUR HOME? HERE'S HOW THE NEW CFPB REGULATIONS MAY AFFECT YOU

CCCS of MD & DE certified housing counselor Matthew Gregory examines how the new CFPB housing regulations will affect homeowners -- especially those who are struggling financially and worried about losing their homes.

Last month the Consumer Financial Protection Bureau (CFPB) instituted a number of new housing regulations to protect homebuyers and homeowners.  In our last housing bulletin, we examined how these regulations affect homebuyers.  This time around, we’re going to contemplate their impact on homeowners.  Matthew Gregory, who works as a certified housing counselor at national nonprofit Consumer Credit Counseling Service of MD & DE (CCCS), says, “The new regulations will increase mortgage servicers’ responsibilities and provide homeowners with information to help them make better informed housing decisions.” 

The CFPB regulations require mortgage servicers to provide homeowners with a clearer view of their mortgage situation. Lenders are now required to:

  • Send homeowners an easy-to-read monthly statement, so they can see how their mortgage payments are credited
  • Promptly fix mortgage related mistakes
  • Credit mortgage payments on the day they’re received
  • Provide homeowners who have Adjustable Rate Mortgages (ARM) with early notification when their interest rates are set to change

Under the new rules, Gregory says mortgage servicers must give homeowners with ARMs 7-8 months notice the first time their loan interest rate is slated to change.  “This early warning makes it easier for homeowners to consider how the change in interest will affect them and if they’ll be able to afford it. If making the new payment is a concern, they’ll have more time to develop strategies to deal with the problem.  For example, they might cut back on unnecessary spending, strive to increase their income or saving, take in a renter, or even put their home on the market.”  Similarly, Gregory notes that mortgage servicers will be required to give homeowners who’ve already been through an initial interest adjustment 2-3 months advance notice each time their rate is scheduled to change. 

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The CFPB regulations also require lenders to make a more active effort to contact and inform borrowers who are falling behind on their mortgages.  Gregory says the new rules require them to call or make personal contact with most borrowers any time they are 36 days late on a mortgage payment.  “At the 45-day mark, if they still haven’t reached borrowers, they have to notify them in writing, and when they do, they’re expected to include information on how to contact the servicer, emphasize the risks the homeowner will face if payment isn’t made, list the options that are available for dealing with the problem, and provide information on how to reach a reputable housing counseling agency.”

In most cases, under the new guidelines, mortgage servicers can no longer initiate foreclosure until a homeowner is more than 120 days delinquent.  CFPB believes this will give borrowers the time they need to submit a loan modification application or pursue other options, such as a structured loan repayment program, short sale, or deed in lieu of foreclosure. Gregory emphasizes that despite the new regulations mortgage servicers still have the final say when homeowners request loan modifications or request other foreclosure options.

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With that said, the new regulations do take a step toward leveling the playing field for financially struggling homeowners.  When borrowers complete and submit a loss mitigation application early enough, their mortgage servicers must evaluate their ability to qualify for all available options. The CFPB believes this will help eliminate the need for multiple applications. When a loss mitigation application has been submitted in a timely manner but is rejected, the servicer must tell the borrower why his/her request was denied. After that the borrower has the right to appeal any mistakes the servicer made in evaluating the application. 

Gregory says one of the strongest measures the new regulations offer is a ban on dual tracking. “Before this law went into effect, lenders sometimes started foreclosure before they were even finished evaluating a borrower’s application,” he explains. “This caused a lot of confusion and concern for homeowners.  Now, lenders can’t begin foreclosure until after the application is denied.”

Gregory stresses, “If you’re having trouble making mortgage payments and you want to take full advantage of the new regulations, don’t wait. It pays to get help as soon as possible. At CCCS, we offer free, confidential foreclosure prevention advice. We take the time to help clients explore their options and see where they really stand. We don’t sugarcoat -- we tell them the truth and help them develop a personalized approach for dealing with their specific situation.”

All of CCCS of MD & DE’s housing counselors are certified, and its program is HUD-approved.  During foreclosure prevention and loss mitigation counseling sessions, its counselors help clients fill out the necessary applications and transmit this paperwork directly to their lenders using the online HOPE loan portal.  Gregory says, “This helps ensure their mortgage servicers receive the necessary information without documents getting lost along the way.  Lenders also provide us with regular updates on their evaluations, so we can keep clients in the loop through the process.”

To find out more about CCCS’s foreclosure prevention program, please visit the agency website.  To schedule a housing counseling appointment, please call 1-866-731-8486.  If you’re worried about your mortgage payment, the sooner you take action, the better chance you’ll have to learn about options and decide on a plan that’s right for you!

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Consumer Credit Counseling Service of MD & DE, Inc. (CCCS) is an accredited 501(c)(3) nonprofit agency that helps stabilize communities by creating hope and promoting economic self-sufficiency to individuals and families through financial education and counseling.  CCCS MD State License #14-01 

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