The Consumer Financial Protection Bureau wants to make mortgage servicing more consumer friendly so borrowers will be given advance notice of interest rate adjustments and how to avoid costly forced-placed insurance.
"It is time to put the 'service' back in mortgage servicing," said CFPB director Richard Cordray.
The new bureau is working on several regulations to ensure servicers are more responsive to borrowers on rules that will be issued this summer for public comment.
“The mortgage servicing rules we are considering reflect two basic, common-sense principles – no surprises and no runarounds,” Cordray said. The director spoke Tuesday morning at an Operation Hope event in Washington. The nonprofit group supports financial literacy and economic empowerment.
One rule requires that borrowers receive clear monthly statements from their servicer with a breakdown of payments for principal, interest, fees and escrows.
For delinquent borrowers, servicers should send alerts and provide information about the available of counseling.
In addition, servicers should make "good faith efforts" to contact delinquent borrowers and inform them of their options to avoid foreclosure, according to the CFPB.
And those borrowers should have "direct, easy, ongoing access to employees who are dedicated and empowered to help troubled borrowers."
The bureau also is working on rules that require prompt crediting of borrowers' payments and quick error resolution.
The CFPB director wants to finalize the servicing rules in January.
