The Consumer Financial Protection Bureau announced in August 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.