Archives for August 2015

Foreclosure protection rules expand

Foreclosure protection rules expand.  The Consumer Financial Protection Bureau (CFPB) is proposing numerous new rules for mortgage servicers to ensure no one is wrongfully foreclosed upon.    Here are the proposed new rules:

  • Provide borrowers with alternatives to foreclosure more than once during the life of the loan.
  • Tell borrowers about these protections even if the borrower is current.
  • Expand the rule to allow for protections for surviving family members, transfers after a divorce, legal separation, or when a borrower who is a joint tenant dies.
  • Notify borrowers when the loss mitigation application is complete.
  • Stop dual tracking.  This takes place when a borrower make a loss mitigation application but the foreclosure process continues.

There are so many foreclosure protection rules that keeping track is next to impossible.  The consumer, homeowner, has no chance of knowing all these rules.  How  can you expect the government to police every rule to every mortgage company?



The first bankruptcy proposed new rule is to shorten the Proof of Claim (POC) filing from 120 days to 60 days after the date of bankruptcy filing.   Remember, no POC means no money for the creditor.  This change would severely hamper creditors ability to manage the debt.  60 days is a short time frame to receive notice, process the notice, hire an attorney, if necessary, obtain current balances owed, obtain complete documentation, prepare the POC, and file the POC.  On top of all of this, the bankruptcy proposed new rule wants to change the form which will require a payment history on the loan or indebtedness back to the first date of the current default.  Such detail will delay the preparation time.   But there can be no delay when you have only 60 days.  Remember that the POC is signed subject to penalties of perjury.  The creditor makes an affirmative representation that the figures are true and accurate.  So rushing to meet the 60 day time frame and filing an incomplete form may subject the creditor to such penalties.    Creditors need to gear up as this proposal should go into effect this December.

The second proposal was to create a national Chapter 13 plan.  This would have eased the necessity of creditors who do business throughout the country from continuing to learn countless variations in plans. Would this bring clarity nationwide and sacrifice specific needs in each District?  Like ever thing else in the world a compromise proposal was discussed allowing each jurisdiction to either accept the national form or opt out and establish its own district plan.

Bottom line is that nothing was agreed on. Stay tuned.