“The rules released today by the Consumer Financial Protection Bureau (CFPB) take some important steps forward, particularly in the requirements on error resolution, but they do not provide the full measure of protection that borrowers need and deserve. They do not preserve one of the most important features of the Home Affordable Modification Program (HAMP), which is the requirement that servicers offer loan modifications when that is in the best interest of both borrowers and investors.”
“Homeowners have no reason to believe mortgage servicers will act in good faith on their own. As we have seen in the Independent Foreclosure Review and the action of the Attorneys General, mortgage servicers have repeatedly been negligent about processing documents submitted by homeowners and have failed to follow their own procedures for handling loan modifications and loss mitigation options.
“We are disappointed that the Bureau did not eliminate completely the practice of ‘dual tracking,’ in which servicers move ahead with foreclosure proceedings while borrowers are still waiting to hear whether their request for a loan modification will be approved. Dual tracking is confusing to borrowers, and has led to many foreclosures that could have been avoided. In addition, the time limits for borrowers to submit loan modification requests and to appeal denials are too short, and do not reflect the realities that borrowers confront when facing foreclosure.
“Putting an end to abusive mortgage servicing practices was one of the most critical tasks that Congress assigned to the CFPB as part of the Dodd-Frank legislation. The current foreclosure crisis is due in large part to servicers’ failure to respond to requests for help from troubled borrowers in a timely, fair and consistent fashion.
“The combination of toxic mortgage lending and abusive mortgage servicing practices have taken a disproportionate toll on borrowers and communities of color: a quarter of African-American and Latino homeowners have either lost their homes to foreclosure, are currently in foreclosure, or are seriously delinquent on their home loans. The long-term consequences for these families, their communities and the nation are profound, and recovery may take several generations. Strong servicing rules are needed to speed that recovery and prevent further damage to communities of color.
“NFHA calls on the CFPB to revise the rules so that they strike a fairer balance between the needs of borrowers and the interests of investors. In addition, the CFPB and other regulators must address troubling fair lending problems in the mortgage servicing process, particularly removing the barriers faced by borrowers who are not proficient in English, or whose servicers refuse to make accommodations for borrowers’ hearing or vision impairments or other disabilities.”