The Consumer Financial Protection Bureau today spelled expanded foreclosure protections for non-borrowing spouses and other homeowners who are granted the same protections afforded to borrowers.
Through a proposal outlined by the Bureau and its director Richard Cordray, the CFPB would require servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan. It would also implement additional servicing transfer protections and work toward prevention of wrongful foreclosure sales.
“The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon,” said CFPB Director Richard Cordray. “Today’s proposal would give greater protections to mortgage borrowers.”
Among the proposed changes, servicers would have to give protections for borrowers who have brought their loans current at any time since the last loss mitigation application—a change geared toward borrowers who face a one-time hardship leading to foreclosure.
It also expands the bounds for “successors in interest,” or those family members, heirs, or other parties, who are considered and notified in instance of the death of a borrower; requires servicers to notify borrowers when loss mitigation applications are complete; protects struggling borrowers during servicing transfers; clarifies servicers’ obligations to avoid dual-tracking; and provides more information to borrowers in bankruptcy.
The proposal doesn’t make any specific reference to reverse mortgages. The Department of Housing and Urban Development has recently outlined new protections for non-borrowing spouses of reverse mortgage borrowers of new Home Equity Conversion Mortgages. Borrowers must document non-borrowing spouses in order to be granted the protections under the new guidance.
Written by Elizabeth Ecker