The Consumer Financial Protection Bureau (CFPB) is planning to assess the effectiveness of the Real Estate Settlement Procedures Act (RESPA) mortgage servicing rule. The rule, introduced in January 2013 and which took effect in January 2014, was designed to assist consumers who were behind on mortgage payments.
Among other things, the RESPA mortgage servicing rule requires servicers to follow certain procedures related to loss mitigation applications and communications with borrowers. Servicers must give, in writing, notices of error within five days, and investigate and respond to the borrowers within 30 days.
Additionally, the RESPA mortgage servicing rule called for greater transparency between the servicer and the borrower. It required clear monthly mortgage statements, early warning before adjusting interst rates, and gave options to avoid fore-placed insurance.
“For many borrowers, dealing with mortgage servicers has meant unwelcome surprises and constantly getting the runaround. In too many cases, it has led to unnecessary foreclosures,” said CFPB Director Richard Cordray of the rule in 2013. “Our rules ensure fair treatment for all borrowers and establish strong protections for those struggling to save their homes.”
Dodd-Frank requires the CFPB to review their rules five years after they take effect, and this includes RESPA. Currently, the Bureau is seeking comment from consumers, consumer advocates, housing counselors, mortgage loan servicers, industry representatives, and the general public regarding the rule, and will issue a report of their assessment by January 2019.
The assessment will give the CFPB better understanding of the costs and benefits of the RESPA mortgage servicing rule, and, according to the Bureau, will provide the public with a better understanding of the mortgage servicing market.
The CFPB’s Information Request can be found here.