The Consumer Financial Protection Bureau’s (“CFPB”) new mortgage regulations are streamlining and refining a compliance system that aims to fix the many errors conducted by loan servicers during the loan modification process.
The new regulations under RESPA increase the number and type of inquiries that impose various legal obligations on a servicer, such as regulating the time in which a servicer has to respond to an application for a loan modification. A servicer’s failure to comply with these obligations may expose them to litigation as certain provisions in the servicing rules create new borrower rights that are enforceable through a private right of action.
A private right of action may be created, for instance, if a servicer fails to properly provide the required and timely notices to a borrower. A borrower may also have a legal remedy if the servicer fails to evaluate applications in accordance with required time frames. Additionally, a private right of action may exist for a servicer’s failure to refrain from foreclosure during certain periods of the review process.
It’s important to note here that no private right of action exists to enforce the terms of an agreement between a servicer and an owner or assignee of a mortgage concerning the evaluation of a borrower’s loss mitigation options or to enforce substantive rights.
Timing is crucial when determining your rights under the new regulations. Depending on when your application is submitted, different obligations are triggered that provides borrowers with varying protections. For example, if an application is received less than 45 but more than 37 days before the scheduled foreclosure sale, then the server has no requirement to send notice in the form of an acknowledgement letter. A borrower should always be mindful or the date of a foreclosure sale, as many of the timeframes are measured in relation to that date. Furthermore, timely submission of requested material is also very important in order to ensure your application is complete, which triggers alternate obligations.
The new regulations are designed to provide servicers with clear timelines, which are meant to make the process more efficient and less costly. Further, the regulations grant consumers new legal avenues in which to ensure compliance of these regulations. To find out more about what avenues might be available to you visit www.consumerfinance.gov or contact an attorney today.