CFPB proposes new rules for mortgage servicers

People walk by a Wells Fargo Home Mortgage branch.

Jeff Horwich: The Consumer Financial Protection Bureau today proposed new rules for the companies that service your mortgage. The bureau's director Richard Cordray says even five years after the housing crash, dealing with your mortgage company can still be a nightmare for homeowners.

Among other things, the proposed reforms seem to mandate a big upgrade in customer service. Greg McBride is a senior analyst with BankRate.com. He's here with more of what's in the rules. Good to talk with you.

Greg McBride: Good morning.

Horwich: So what's the consumer experience that you think motivated these new mortgage rules?

McBride: There's been a lot of frustration on the part of consumers about everything from how their payments get posted to paperwork that gets lost whenever they're faxing in, trying to get a loan modification. And the compilation of all of those complaints has really spurred the Consumer Financial Protection Bureau to institute some rules that are designed to really level the playing field, make sure that all mortgage servicers are playing by the same rules.

Horwich: These rules are tentative, and they won't go into effect until after a public comment period, but as they're written now, what do the rules require?

McBride: There's nothing too earth-shattering in there. Mostly I expect that you're going to see the servicers basically play nice on this, but there are requirements about issuing monthly statements; specifying the advance warning that borrowers get whenever they have an adjustable interest rate that's about to change; prohibiting the dual tracking of modification requests in foreclosure pursuit. And I think that's probably the one area you're going to see a little bit of contention from some of the servicers.

Horwich: And just to put that last item in layman's terms, that means that they can't continue foreclosure proceedings against you if you are trying to save your home.

McBride: If you're trying to get a mortgage modification, yes.

Horwich: And that one surprised me a little bit, partly because I thought, haven't we already done that? We've been trying to beef up mortgage servicer rules since the crash -- why are we needing to do this more?

McBride: Well, what they're trying to do is institute a set of rules that apply to all servicers of all sizes. Really level the playing field. And I think, once again, a lot of the larger servicers, there's nothing too earth-shattering in there, nothing that they haven't already had to deal with. So I don't think you're going to see much coming from the opposition, coming from them. Smaller companies, they're likely to voice a little bit more opposition just because they lack the scale to absorb the higher costs like their larger competitors.

Horwich: So that's what this is about. Greg McBride, senior analyst at BankRate.com. Thanks a lot.

McBride: Thanks for having me.

About the author

Jeff Horwich is the interim host of Marketplace Morning Report and a sometime-Marketplace reporter.

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