A new set of regulations finalized by the Consumer Financial Protection Bureau will require mortgage servicing companies to treat borrowers more fairly.

Under new rules, mortgage servicers will have to send borrowers clear monthly billing statements that adequately warn them if interest rates are going to increase. Better internal record keeping and faster payment processing are a major part of these new rules – this means that payments will be recorded faster and banks will be obligated to eliminate errors to prevent aggressive collecting or inaccurate bills from being sent out.

The biggest change, perhaps, is that servicers now have to actively help borrowers avoid foreclosure. In addition, “dual-tracking”, the practice of pursuing loan modification talks and proceeding with a foreclosure, is now banned.

We’ve been watching these important regulatory changes closely, since so many distressed homeowners in Florida were victims of predatory lending practices. These regulations take aim at mortgage servicing companies rather than at the lender because consumers are unable to choose who services their mortgage, the loan is simply bought by the servicer as a part of large package of loans. This is one of the reasons why servicers get away with charging fees and being difficult to work with, since consumers have no recourse and cannot take their business elsewhere.

Homeowners who are in distress and are near foreclosure don’t have to accept the situation and go through the foreclosure process, there are many other options, particularly with this new regulation in place. In fact, under the new rules borrowers will be able to apply for lower monthly payments by filing out a single form with the mortgage company, making it faster and easier to start the loan modification process.

Source: Associated Press, “Consumer finance agency finalizes rules to protect mortgage borrowers from runarounds, fees,” Jan. 17, 2013.

Our Orlando law firm helps Florida borrowers avoid foreclosure and negotiate loan modifications. More information is available on our website.