Only a bit more than three years after the foreclosure crisis began, the government is stepping in to force banks to offer consumers two things: a formal complaint process (and toll-free number) and better standards for mortgage servicing.
The Wall Street Journal reports that, at the behest of The Office of the Comptroller of the Currency, big lenders must create one process for all customers — no matter which bank serviced their mortgage — to levy complaints, or request a review of their foreclosure.
Only homeowners whose primary residence was foreclosed on are eligible to have their case reviewed, and only if their foreclosure took place between 2009 and 2010.
Outrage Over Improper Foreclosures Prompts Change
The decision to create this process was prompted by the discovery that 14 different lenders had foreclosed on homes even though they lacked the proper documents. “Robosigning” — when banks processed foreclosure documents without actually reviewing them or properly notarizing them — was perhaps the most egregious example of lenders’ negligence in the foreclosure process, and outrage over this practice helped prompt the new regulations, according to the Wall Street Journal.
A website and ad campaign will launch this fall to publicize the formal review process.
Mortgageorb.com reports that the Consumer Financial Protection Bureau, the regulatory body created by the Dodd-Frank bill, has plans to standardizing mortgage servicing. According to Raj Date, the lack of transparency and standards in the mortgage industry are bad for consumers, and bad for the economy.
CFPB Uses Crowdsourcing to Create New Forms
The CFPB has introduced the Know Before You Owe tool, which uses consumer and industry feedback to help make mortgage disclosure forms more straightforward. With regulatory fixes coming into place, it seems less and less likely that America will see a collapse of the mortgage industry like we had in 2008. Bankers are likely upset that this also means we won’t see a bubble like we did the last decade.
MortgageOrb.com: Raj Date Calls Servicing Standards a CFPB Priority
Wall Street Journal: Foreclosure Complaint? Stand by For New Toll-Free Number