New federal rules help protect homeowners against foreclosure

The federal government is introducing new rules to help protect homeowners against wrongful foreclosures.

The Consumer Financial Protection Bureau (CFPB), a federal agency created in the aftermath of the 2008 Financial Crisis, recently released a new set of rules that it says will help protect homeowners against wrongful foreclosures, according to the CT Post. The rules largely pertain to what information and protections mortgage servicers are supposed to provide consumers who may be facing the threat of foreclosure. The rules were adopted after a report earlier this year found that many servicers were providing homeowners either with incorrect or out-of-date information, or, in some cases, with no information whatsoever.

CFPB rules expanded

As NBC News reports, the new regulations are largely modifications and expansions of existing regulations that apply to mortgage servicers. The new rules will largely take effect over the next year. Mortgage servicers are parties that are responsible for collecting payments from a mortgage borrower and passing those payments on to the actual lender.

One of the most significant protections brought into effect by the new rules is the number of times a servicer must provide borrowers with certain foreclosure protections. Currently, servicers are required to offer those protections just once over the life of the loan. With the new rules, servicers will have to offer these protections more than once to certain borrowers, especially borrowers who suffer an unforeseen hardship, such as divorce, death of a family member, or job loss, after their last permanent loan modification.

Other borrowers helped

Among the other protections introduced with the new regulations are those requiring servicers to provide more information to struggling homeowners who are in bankruptcy, providing the same protections to "successors in interest" (such as heirs and surviving spouses) as were provided to the original borrower, and clarifying at what point a borrower is considered to be delinquent.

Additionally, the new rules protect homeowners who have submitted loss mitigation applications. Loss mitigation is a process whereby the homeowner negotiates with the servicer to make some form of payment toward the outstanding debt. Previously, servicers were allowed to evaluated applications for loss mitigation while also continuing with foreclosure procedures, a process known as dual-tracking. That process has now been banned. Servicers are also now required to promptly notify homeowners of when their loss mitigation applications are complete.

Defense against foreclosure

The above rules will provide some relief and assistance to homeowners who are facing the frightening prospect of foreclosure. For those who are struggling to make mortgage payments or who may be faced with wrongful foreclosure, it is important to speak to a bankruptcy and foreclosure defense attorney today. Foreclosure is a complex process that requires certain legal requirements for the lender to meet. If the lender does not meet these requirements, then it may be possible to put a stop to foreclosure proceedings. An experienced attorney can help homeowners determine if those requirements actually have been met and how they may be able to fight against a potential foreclosure.