Housing Market, Regulation

CFPB’s Office of Servicemember Affairs announces new mortgage protections for military

cfpbHolly Petraeus, the assistant director of the CFPB’s Office of Servicemember Affairs, announced new protections for servicemembers in an agency blog post last week.

According to Petraeus, more than one-third of all complaints received from servicemembers are related to mortgage problems.

“Concerned military families have told me about the painful consequences of poor mortgage servicing, sloppy lender recordkeeping and inconsistent foreclosure practices,” Petraeus said. “Obviously, servicemembers aren’t the only homeowners who have run into trouble with mortgage servicers or faced financial hurdles. But the demands of military service sometimes increase the severity of the problems or limit the solutions available to address them.”

Petraeus announced the introduction of new rules in 2014 that are designed to address the worst problems reported by servicemembers in the mortgage servicing industry.

Servicemembers have reported issues with servicers moving ahead in foreclosure proceedings when the borrower was working with the servicer on loan modification, a practice called “dual tracking,” which is restricted under the CFPB rules.

Servicemembers have also reported problems with repetitive paperwork for enrollment in programs that could help them save their homes. The new rules require servicers to evaluate a borrower who files an application for all options available, which is designed to eliminate multiple application requirements.

Additionally, the CFPB rules require mortgage servicers to train individuals to answer borrower inquiries and to assign representatives to help borrowers in the event of an issue. Servicers are also required to keep track of borrower paperwork.

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