The Consumer Financial Protection Bureau proposed a number of regulatory changes that would significantly improve how loans are serviced. For example, the CFPB’s proposals would increase transparency in the servicing process by appointing a single point of contact for each homeowner, making it easier for homeowners to access full information on their pending application, and requiring servicers to be more proactive in reaching out to delinquent homeowners.
While the proposed changes are a step forward, some do not go far enough. Woodstock Institute joined Americans for Financial Reform and organizations around the country to ask that the CFPB revise and strengthen the protections contained in its proposals. In order to avoid the fraudulent practices that led up to the robosigning scandal, we asked that the CFPB require servicers to provide borrowers with verification of the servicers’ right to foreclose before initiating any foreclosure action. We also asked that CFPB provide more flexibility for homeowners to request that errors in the process be resolved. The CFPB should also strengthen its provisions on “dual tracking” the foreclosure process, where servicers pursue foreclosure at the same time as loan modifications. Dual tracking can lead to situations where homeowners lose their homes without being adequately considered for ways to avoid foreclosure. Servicers must also be more accountable for the maintenance of foreclosed homes they own so that they don’t become blighted and attract crime.
For more information on how the CFPB could strengthen its servicing proposal, please read the joint letter.