Today the Consumer Financial Protection Bureau released its much-anticipated final rules governing the mortgage servicing industry. While the final rules show marked improvement over the proposed rules that were released in August, they still fall short of what’s needed to ensure that banks and other mortgage servicers treat American homeowners fairly and responsibly.
The need for comprehensive, strong and enforced servicing standards couldn’t be more critical. The serious and deep problems in the servicing industry are well documented. Countless American families are right now struggling with their servicer in order to enter into good faith loan modifications so they can make an affordable payment and stay in their homes. Millions have already lost that fight and lost their homes. It is in the immediate interest of these families, their communities and our housing market and economy as a whole that this get done right.
We urge the Bureau to go back, both through the coming inter-agency rule process and using their own authority, and correct the following places where this rule falls short of complete reform:
• Servicers must be required to offer all homeowners facing foreclosure a loan modification. It is the base line of their responsibility and it must be mandatory.
• Homeowners must have the baseline right to have any and all errors made in the determination of their loan modification corrected.
• The rules governing dual tracking – the process of moving foreclosure proceedings while a loan modification is in process – must be tightened to allow all homeowners, regardless of their state foreclosure process, ample time to apply, be processed and have their loan modified without the foreclosure proceeding.
Finally, any rules are only as good as the enforcement of them. We urge the CFPB to implement vigorous enforcement of the rules that it has put forth today and the corrections we trust will be coming. American homeowners and all who are struggling in this economy that has been so damaged by the Wall Street driven housing crisis need the CFPB to stand up for them and make certain that the badly broken mortgage servicing is fixed once and for all.
The New Bottom Line is a national coalition fueled by a coalition of community organizations including PICO National Network, National People's Action, Alliance for a Just Society, and Right to the City. We are congregations, labor unions, and individuals working together to build a movement that challenges established big bank interests on behalf of struggling and middle-class communities.