Governor Dayton will soon be signing a new bill that includes new protections for homeowners facing foreclosures. This new law is known as the Homeowners Bill of Rights.
Some of the ways that it protects homeowners are as follows:
- Loan servicers are required to communicate all options to homeowners.
- Loan servicers are required to offer loan modifications to all eligible homeowners.
- “Dual tracking” is banned. Dual tracking is when servicers foreclose without a clear yes or no on loan modification.
- Servicers are required to assist homeowners in submitting documentation regarding the foreclosure process.
- Homeowners are allowed to take the servicer to court to stop a foreclosure if the servicer fails to comply with any aspect of the law.
The Consumer Financial Protection Bureau issued two regulations that expand the types of mortgage loans subject to federal protections and require creditors to provide loan applicants with written appraisals. You can access the regulations here.
One of the regulations expands the types of mortgage loans subject to the protections of the Home Ownership and Equity Protections Act HOEPA, which was enacted to address abusive refinancing practices and equity loans with high interest rates or high fees. HOEPA was amended through the Dodd-Frank Wall Street Reform and Consumer Protection Act to add protections for high-cost mortgages.
Among the changes, the regulation requires borrowers to receive home ownership counseling before obtaining a high-cost mortgage.
The regulation also adds exemptions for three types of loans the CFPB does not believe are as risky: loans to finance initial construction of a house, loans originated and financed by housing finance agencies, and loans from the U.S. Department of Agricultures Rural Housing Service loan program.
The CFPB also issued a rule that would require creditors to provide applicants with free copies of all appraisals and other written valuations and requiring creditors to notify applicants in writing.
The rule is consistent with an amendment to the Equal Credit Opportunity Act. Previously, creditors only had to provide copies of appraisals when applicants requested them.
Creditors are prohibited from charging applicants for copies of appraisals, but may charge for appraisals and other written valuations.
Both rules become effective January 18, 2014.
via Courthouse News Service.