WASHINGTON (CN) - The Consumer Financial Protection Bureau adopted final rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act that aim to "protect homeowners from surprises and costly mistakes by their mortgage servicers."
In response to the 2008 housing crisis, the Consumer Financial Protection Bureau worked on updating rules that would prevent mortgage servicers from "giving their customers unwelcome surprises and runarounds."
"Millions of homeowners are struggling to pay their mortgages, often through no fault of their own," said the bureau's director Richard Cordray in a statement last August. "These proposed rules would offer consumers basic protections and put the 'service' back into mortgage servicing."
Among other things, the rules would change regulations to periodic mortgage statements, prompt crediting of loan payments, error resolutions, and information requests.
The bureau also proposed adopting requirements related to mortgage servicer policies, early intervention with borrowers who make late payments, and continuity of contact with borrowers, among others.
Last week the bureau published two final rules related to the actions- one related to the Real Estate Settlement Procedures Act, and one related to the Truth in Lending Act.
Under the new rules, mortgage servicers would be required to provide borrowers with clear monthly statements with a breakdown of payments by principal, interest, fees and escrow. Servicers would also be required to provide borrowers with warning before interest rates change for most adjustable-rate mortgages.
Another rule would require lenders to make reasonable, good faith determinations that borrowers have the ability to repay their mortgage loans.
The final rules will go into effect January 10, 2014.
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