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September 10, 2024 - OAKLAND — California Attorney General Rob Bonta, along with 19 attorneys general, today submitted a comment letter supporting the Consumer Financial Protection Bureau’s (CFPB) proposed rules on pre-foreclosure mortgage servicing requirements. The proposed rules would provide new foreclosure safeguards for homeowners having trouble paying their mortgage and require that critical information be provided in languages borrowers understand.
“Helping homeowners avoid unnecessary foreclosure is a critical issue, especially in the face of California’s housing crisis. The pathway for asking for help and evaluating options for help should be simple and easy to understand instead of another headache on the way to relief. We must ensure people can easily understand and use the resources they are eligible for to stay in their homes,” said Attorney General Bonta. “I commend the Consumer Financial Protection Bureau for its commitment to helping struggling homeowners avoid unnecessary foreclosure and for recognizing the important role of states in providing additional foreclosure protections.”
Borrowers having trouble making their mortgage payments may reach out to their mortgage servicers for loss mitigation options to avoid foreclosure. Certain loss mitigation options may help borrowers stay in their homes and may include forbearance, repayment plans, or a loan modification.
The CFPB’s proposed rules would establish a more streamlined loss mitigation process that provides mortgage servicers greater flexibility in offering loss mitigation options. They would also prioritize foreclosure safeguards for struggling borrowers, increase transparency regarding the loss mitigation process, prevent the accrual of certain fees during loss mitigation review, and establish requirements to expand language access to mortgage assistance for borrowers who speak languages other than English.
In the letter, the attorneys general support the proposed rules and offer recommendations to help ensure that borrowers facing mortgage distress are able to access available loss mitigation options without unnecessary hurdles. The attorneys general recommend the rules:
- Establish a timeline for mortgage servicers to complete the evaluation of a borrower’s eligibility for loss mitigation assistance, since delays in evaluations can increase the length of a borrower’s delinquency.
- Require servicers to use simple, plain, and tailored language about what loss mitigation options borrowers qualify for, so borrowers can understand what actions they may take.
- Require servicers to hold loss mitigation options offered to a borrower open when that borrower is evaluated for additional options.
- Require servicers to extend protections to borrowers who experience a material financial change being denied loss mitigation options, since those financial changes may make the borrower eligible for other loss mitigation options for which they were previously deemed ineligible.
A copy of the letter can be found here.
Source: CA. DOJ
