If the Consumer Financial Protection Bureau has its way, life is about to get a lot easier for folks with mortgages. Banks and mortgage servicers are saying it’s going to cost entirely too much if they’re forced to restructure their terms and conditions.
Breath of Fresh Air
The CFPB is citing authority given by the Dodd-Frank Wall Street Reform and Protection Act as its justification for tightening the leash on banks and mortgage companies. Not only that, but you may recall earlier this year the nation’s biggest mortgage providers agreed to settle with 49 states for a sum of $25 billion for its role in the “robo signing” scandal.
There were many who lost their jobs for participating in what could have brought the entire sector down.
Now, though, if this moves forward, you’ll begin seeing changes in the way your monthly statement looks. Your mortgage payment will be immediately credited to your account, the terminology will consistent, “to the point” and easy to understand and – this is the part many are looking forward to: you don’t have to worry about any interest rate increases without “several months” of a head’s up.
If this is passed, changes will be introduced within weeks with a full transition by January, 2013.
Fitch Ratings says the nation’s mortgage services and the major banks will have to undergo massive changes if they’re to stay in compliance with these recommendations. And it also says it’s going to be expensive for these financial companies. Still, supporters say it’s all about the transparency and if the CFPB recommendations are put into place, transparency will finally be moved to the top of the list in terms of priorities.
Those who don’t support the recommendations say the theory is flawed. One theory follows those homeowners who continue to struggle with making their payments. “If mortgage holders were given notice of increased payment amounts, they could begin budgeting for the additional cost sooner or shift to alternative products. Of course, if the borrower is already experiencing financial hardship any advance notice or better disclosure could be deemed irrelevant.” They also agree that the advance notice could result in banks and mortgage companies working to offer those struggling with payments various “avoidance alternatives” or even modify the mortgage.
Before any formal announcement is made, CFPB is hoping to get feedback from both the financial sector as well as the consumers the board protects. This is one reason the agency is waiting until the early summer before making any of these changes. Consumer Financial Protection Bureau Director Richard Cordray spoke with the press on Tuesday and said,
For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress. It’s time to put the ‘service’ back in mortgage servicing.
For those interested in commenting on these latest proposals, you can visit the Consumer Financial Protection Bureau website. Consumers have always wanted someone in the government to hear them – and the CFPB has already established that it’s priority is the collective American citizen. So what are your thoughts? Do you support more disclosures? Do you think the banks are doing their job in terms of disclosing the facts to mortgage holders?