California Attorney General Rob Bonta, along with 19 other attorneys general, has submitted a comment letter supporting the Consumer Financial Protection Bureau’s (CFPB) proposed rules on pre-foreclosure mortgage servicing requirements. The proposed regulations aim to provide new foreclosure safeguards for homeowners struggling with mortgage payments and ensure critical information is available in languages borrowers understand.
"Helping homeowners avoid unnecessary foreclosure is a critical issue, especially in the face of California’s housing crisis. The pathway for asking for help and evaluating options for help should be simple and easy to understand instead of another headache on the way to relief. We must ensure people can easily understand and use the resources they are eligible for to stay in their homes," said Attorney General Bonta. "I commend the Consumer Financial Protection Bureau for its commitment to helping struggling homeowners avoid unnecessary foreclosure and for recognizing the important role of states in providing additional foreclosure protections."
Homeowners facing difficulties with mortgage payments may contact their mortgage servicers for loss mitigation options such as forbearance, repayment plans, or loan modifications to avoid foreclosure.
The CFPB’s proposed rules aim to establish a more streamlined loss mitigation process that offers mortgage servicers greater flexibility in providing loss mitigation options. These rules would prioritize foreclosure safeguards, enhance transparency regarding the loss mitigation process, prevent certain fees from accruing during loss mitigation review, and expand language access to mortgage assistance for non-English speaking borrowers.
In their letter, the attorneys general endorse the proposed rules and offer several recommendations to ensure that borrowers facing mortgage distress can access available loss mitigation options without unnecessary hurdles. They suggest:
- Establishing a timeline for mortgage servicers to complete evaluations of borrowers' eligibility for loss mitigation assistance.
- Requiring servicers to use clear and tailored language about available loss mitigation options so borrowers can understand what actions they may take.
- Mandating that servicers hold open any loss mitigation options offered while evaluating borrowers for additional options.
- Extending protections to borrowers who experience significant financial changes that might make them eligible for different loss mitigation options than previously determined.
A copy of the letter can be found here.