By Sean Coffey, Program Manager at ForeclosureHelpSCC
In an earlier post, we explained that the Consumer Financial Protection Bureau announced proposed rules around loan servicing and we examined the first part of this proposal. In today’s post, we’ll examine the second part of the proposed loan servicing rules. The rules are nicknamed the “no runaround” rules, and address loan servicing issues that homeowners sometimes encounter with their mortgage loan servicers.
Under the new rules, banks or servicers will have to:
- Credit a consumer’s account on the same date that the servicer received the payment.
- Maintain accurate and accessible documents to minimize errors, provide oversight of any contractors and of any foreclosure attorneys working on behalf of the servicer.
- If a homeowner notifies a servicer that they believe a mistake has been made, then the servicer would need to provide acknowledgement of the homeowner’s complaint, conduct an investigation, and respond to the homeowner in a timely manner.
- Provide direct and ongoing access to servicer employees who have the power to assist homeowners.
- Promptly review applications for programs that help avoid foreclosure.
- Wait until after a review of an application is complete before moving forward on a foreclosure sale.
- Inform homeowners when their packages are incomplete.
- Allow homeowners to appeal certain servicer decisions.
Some of these proposed rules are similar to laws that are already on the books, for example the Real Estate Settlement Procedures Act also requires banks and services to respond to homeowner’s request in a timely manner.
We have heard from several homeowners that the servicing of their loan has been transferred and in the process of transferring, the loan payments made to the first servicer aren’t being credited with the new servicer.
If this has happened to you, you may want to consider sending a qualified written request, also known as a “RESPA Request.” RESPA stands for Real Estate Settlement Procedures Act. Under this act, a borrower can send a letter to their lender if there is a dispute about payments or other issues related to the loan, and their servicer is required to acknowledge the request within 20 business days and must try to resolve the issue within 60 business days.
If you do send a qualified written request, it’s important that you include this sentence at the beginning of your letter:
This is a “qualified written request” pursuant to the Real Estate Settlement and Procedures Act (section 2605(e)).
And include this sentence at the end of the letter:
I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.
You should send your letter through registered mail so that you have proof that your bank or servicer received it. You can see an example of a qualified written request on the HUD website: Example Qualified Written Request.
If you would like to learn more about the proposed rules, visit the “Regulation Room” and see how the proposed rules would affect real-life situations. You can also provides comments on any loan servicing issues you’ve had, or on the proposed legislation.
Have you encountered any loan servicing issues with your mortgage? Any suggestions you would give to the Consumer Financial Protection Bureau as they consider implementing these rules?
Please note: All content included in the ForeclosureHelpSCC blog is provided for information only and should NOT be considered legal or tax advice. If you have any questions, please feel free to contact us on our hotline: (408)-293-6000, or visit our website: www.foreclosurehelpscc.org.