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CFPB unveils new draft monthly mortgage statement for borrowers.

On Feb. 13, the Consumer Financial Protection Bureau (CFPB) unveiled a draft monthly mortgage statement for borrowers designed to make it easier for homeowners to understand their home loans. The CFPB is in the process of testing a prototype monthly statement with consumers, and also has posted it online to gather as much feedback as possible.

The agency intends to propose a rule on the new monthly mortgage statement for public comment later this year--possibly in the summer, the CFPB said.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the statement must include information about the principal amount, the current interest rate, the date on which the rate may next reset, a description of any late payment and penalty fees, housing counselor information and a phone number and email address for contacting the servicer.

In a press release, CFPB Director Richard Cordray said, "This draft statement shows consumers the breakdown of their mortgage payments--what money goes to the loan principal, interest and fees." He added, "This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up. Given the widespread mortgage servicing problems we've seen over the past few years, consumers need clear disclosures they can count on."

On Feb. 13, in an article posted on CFPB's website, Whitney Patross wrote: "We have put our model form through one round of consumer testing, and we are scheduling two more. We are posting this version because we also want to hear from the public, including consumer groups and industry. What do you think of it? Let us know!"

Patross added, "After final publication of the rule and form, creditors, assignees and servicers will have some flexibility to tailor the model form to work for their needs and the needs of their customers."

On the day before the draft statement was unveiled, CFPB Director Cordray published an op-ed in the Washington, D.C.-based newspaper Politico outlining the agency's new vision for regulating servicers. Cordray wrote: "While the CFPB is charged with overseeing all sorts of financial products and services-- including credit cards, checking accounts and payday loans--our greatest focus is on the mortgage market."

He added, "There is much that needs to be fixed in this broken market--from the moment a prospective homeowner starts shopping for a loan all the way until the loan is finally terminated, which for too many people these days comes about through foreclosure."

Cordray wrote: "The CFPB is implementing rules and helping to articulate standards so we never again end up in the mess we still see around us today. This is tough work that will take careful thought and time. But we also recognize we can help struggling homeowners now. That is why we are taking action on the mortgage servicing front to help consumers as quickly as possible."

Cordray noted that "nonbank servicers used to receive little or no oversight. The CFPB is changing that. Our new authority allows us to supervise both banks and non-banks. Indeed, for the first time, the federal government will have the authority to look into the entire mortgage servicing market. This is a critical improvement: We will be able to monitor all players to make sure they abide by federal consumer financial laws."

In addition to mentioning the new prototype mortgage billing statement, Cordray noted CFPB will be issuing new consumer protections around "force-placed insurance." He wrote, "Under [Dodd-Frank], we will write a rule to prevent servicers of most mortgages from charging for this insurance unless there is a reasonable basis to believe that borrowers have failed to maintain their own insurance. It will require servicers to provide consumers an opportunity to obtain their own insurance, which is generally less expensive than force-placed insurance obtained by the servicer."

Cordray's op-ed piece also said the agency will issue new disclosures for hybrid adjustable-rate mortgages. He explained that consumers would be notified "months ahead of their first interest-rate adjustment and will receive a Good Faith Estimate of their new monthly payment along with a list of alternatives they may pursue to head off the higher rate, including refinancing and renegotiation of loan terms."

Cordray closed his commentary with this acknowledgement: "The CFPB cannot address all of the problems in the servicing industry in one fell swoop. But we are already making important adjustments that will protect consumers more effectively. As we mature and grow, we will carefully identify risks and act as needed. We will also make certain that all federal consumer financial laws are being followed."
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Title Annotation:Briefing Book
Comment:CFPB unveils new draft monthly mortgage statement for borrowers.(Briefing Book)
Publication:Mortgage Banking
Date:Mar 1, 2012
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