CFPB Releases New Mortgage Rules Resources for Consumers

On January 10, 2014, the Consumer Financial Protection Bureau (CFPB) released new mortgage rules designed to provide homeowners and consumers with new rights and greater protections from many of the harmful lending practices that led to the recent mortgage crisis and attendant financial collapse.

Virtually every mortgage a lender makes must now be evaluated, first and foremost, on the borrower’s ability to repay the loan. This means that the borrower must be able to repay the loan for years, not just during the first few months when a “teaser” interest rate keeps monthly payments low.  These new mortgages will be referred to as “Qualified Mortgages” or “QMs.” QMs are designed to be safer and easier to understand than the loans that lead to the recent financial crisis. New CFPB rules also limit the points and fees lenders can charge for making a QM.

There are a number of other rules designed to safeguard consumers from predatory lending practices. These rules include, but are not limited to, the following:

• Mortgage lenders and servicers are required to send you a clear monthly statement so you can see how they are crediting your payments.

• Mortgage lenders and servicers are required to fix mistakes promptly.

• Mortgage lenders and servicers are required to credit payments the day they get them.

• Mortgage lenders and servicers are required to give you early notice if you have an adjustable rate mortgage and your interest rate is about to change.

• Mortgage lenders and servicers are required to call or contact borrowers by the time they are 36 days late on their mortgage.

• With limited exceptions, mortgage lenders and servicers cannot initiate a foreclosure until the borrower is more than 120 days delinquent.

• Mortgage lenders and servicers cannot start a foreclosure while they are also working with a homeowner who has submitted an application for a loan modification or other alternative for help.

• Mortgage lenders and servicers are required to advise borrowers who fall behind on their mortgages of all of the workout options available to them.

• Mortgage lenders and servicers are required to explain to a borrower why a mortgage modification was denied.

Taking out a mortgage is arguably one of the most important decisions a consumer will make. The new CFPB rules are designed to make sure that consumers have the knowledge and protections necessary in order to make sound decisions about their financial futures.

If you feel that your lender or servicer has violated any of these rules, please feel free to contact Garland Griffiths Knaupp at (503) 846-0707  for a one-hour consultation or visit the CFPB website at http://www.consumerfinance.gov for more information.

It is very important to contact an attorney as early in the process as possible to protect your rights as a consumer.  If you think you have been harmed, you may have as little as 1 year from the harm to file suit to enforce the rules in court.

What documentation do I need to produce for a foreclosure mediation?

In our last blog post (Foreclosure Actions Down—Way Down—As Oregon’s New Foreclosure Mediation Program Ramps Up—Way Up), we talked about the success that Oregon’s new mediation program is having in bringing borrowers and lenders to the mediation table. There are already more mediations scheduled in November and December of this year than total mediations that occurred under the old mediation program last year. As we discussed, mediation was only required under the old program if the lender filed a non-judicial foreclosure. This turned out to be a loophole the size of Mount Hood because lenders simply stopped filing non-judicial foreclosures and started filing judicial foreclosures instead. Now in fairness to the good people of the Oregon legislature, for the past 50 years or so, almost all foreclosure in Oregon were non-judicial foreclosures. The legislature certainly did not expect lenders to completely abandon the long-established practice of foreclosing non-judicially. But hindsight, as they say, is 20/20. Large lenders did just that—virtually stopped all non-judicial foreclosures—so the Oregon legislature had to step in once again to amend the law.

Enter the new foreclosure mediation program.

Mediation is now required in cases that involve judicial and non-judicial foreclosures.

Loophole closed. Mediation numbers skyrocket. And that is a good thing.

It is too early to tell whether these face-to-face meetings will actually result in more loan modifications. Despite ongoing pressure from the Federal government, and not one but two major settlements involving improper foreclosure servicing practices, loan modifications are still not easy to come by for some homeowners. And the promise of a mediation should not be confused with the promise of a loan modification. For a modification to occur, a borrower still must qualify and a great deal of supporting documentation is required. The process is not terribly enjoyable for homeowners. But if you want a modification, it is a process that you will have to go through.

So if you have a mediation scheduled, or you think you might qualify for a mediation, here are the documents that you will generally have to produce and provide to the lender. For homeowners who have already received a mediation notice, these documents must be provided within 25 days after receipt of the notice. So advance preparation is critical.

First, you will be required to complete a Universal Intake Form. This form is available on the foreclosure mediation website. This form details information about you, your lender, and your current financial situation.

You will also be required to provide the following:

Any additional information about your current income, expenses, debts, and other obligations;

• A description of your financial hardship, if any;

• Documents that verify your income and expenses, including:

• Pay stubs confirming your income for the most recent full two months

• If self-employed, a profit and loss statement

• Bank statements from the most recent two full months

• If relying on social security, disability, unemployment, or other non-wage benefits, a benefits statement from the benefit provider showing the amount, frequency, and duration of the benefit

• A divorce decree judgment or separation agreement if you are relying on child

• Your most recent electric, heat, gas, or other utility bill

• Your most recent property tax statement or appraisal

• Your tax returns from the two most recent years

Providing accurate and complete information will greatly improve your chances of reaching an agreement with your lender during a mediation. This is a valuable opportunity that should not be wasted. Yes, accumulating all these documents takes time and involves no small amount of effort. But this effort may be well worth it if a mediation results in an agreement which will save your home.

So don’t delay. Time is of the essence. Start preparing now.

If you have any questions, please feel free to contact us at (503) 846-0707 or visit our foreclosure defense website garlandgriffiths.com.





Next: What documentation should I receive from my lender prior to a foreclosure mediation?

Foreclosure Actions Down—Way Down—As Oregon’s New Foreclosure Mediation Program Ramps Up—Way Up

There is good news on the often gloomy foreclosure defense front.

Oregon’s new foreclosure mediation program is only a few months old, but lenders (yes, lenders!) have referred over 1,700 new cases to the Mediation Case Manager, the agency responsible for running the program for the state. Of that, more than 1300 cases were just received in the last few weeks.

Chase Bank is the largest bank participating so far with more than 600 requests. The four banks with the most mediation requests are Chase, Nationstar, Green Tree Servicing and US Bank. Bank of America and Wells Fargo—the state’s largest mortgage lender—have yet to submit mediation requests. However, B of A and Well Fargo are (purportedly) preparing to submit a large volume of cases “soon.”

If true, that is really, really good news.

The new mediation program requires the state’s large mortgage lenders to offer a meeting with homeowners before they can foreclose. Lenders must submit mediation requests to the Mediation Case Manager and homeowners are then contacted by a Mediation Case Manager representative notifying them of the request. Homeowner’s must then pay a fee—$50 or $175 depending on household income—to participate in the program and work with a HUD-approved housing counselor. Housing counselors will work with homeowners throughout the process and help homeowners obtain and complete the required documents and upload these documents to the mediation program online portal. Housing counselors will also be available to review the lender's documents once they are available in the online system. In some cases, housing counselors may attend the mediation conference with homeowners and serve as an advocate and aid in the discussion on foreclosure avoidance options.

At present, there are currently 100+ mediations scheduled for November and December.

Unsurprisingly, the success of the new mediation program has had a direct impact on the number of new foreclosure actions throughout the state. New foreclosure cases have virtually ground to a halt while the first wave of mediations make their way through the program. According to numbers compiled by Gorilla Capital, a Eugene company that buys and resells distressed properties, foreclosures in the state’s largest seven counties have fallen by 42 percent from a year ago and 80 percent from a month earlier month. While this might be a temporary reprieve, the opportunity for a struggling homeowner to have a face-to-face meeting with a lender is meaningful and should not be ignored. Our hope is that a large percentage of these mediations will result in some sort of agreement—whether that agreement is for a loan modification, a short sale or a deed-in-lieu of foreclosure.

Time will tell.

If you have any questions about the new mediation program, please visit the Oregon Foreclosure Avoidance Program website or call Garland, Griffiths Knaupp at (503) 846-0707. We’re here to help.

"Enormous Increase" in Foreclosure Meditation Requests

The new Oregon Foreclosure Avoidance Program has received over 450 mediation requests since its inception on August 4, 2013. What is most compelling about this number is that the vast majority of mediation requests have come from lenders. In the first 13 months of the prior Oregon mediation program, only 286 cases were referred to mediation. However, the prior program was overhauled by Senate Bill 558, which came into law last spring. Under Senate Bill 558, both non-judicial and judicial foreclosures are now subject to the mediation requirement. Under the prior program, only non-judicial foreclosures required mediation. As a consequence, many lenders simply stopped using nonjudicial foreclosures and moved to judicial foreclosures instead. This unintended loophole virtually gutted the "mediation requirement" under the old mediation program. 

Under the new program, a lender who intends to foreclose (whether the vehicle is a judicial or nonjudicial foreclosure) must first request a meeting with the homeowner. A representative from the Oregon Foreclosure Administration Program--the agency responsible for administrating the mediation program--will notify the homeowner of the request. The homeowner has 25 days to respond and must pay a fee -- $50 or $200 depending on income -- and provide some financial information to the lender. The lender must provide payment history and a copy of the loan documents to the homeowner. 

According to Oregon Attorney General Ellen Rosenblum, indications are that hundreds of additional cases could be referred to the new program in the upcoming weeks.

“No one’s happy about impending foreclosures, but we’re delighted with these numbers because, unlike the earlier program, it means this one is working the way it’s supposed to,” said Rosenblum. “We worked hard to close the loophole that allowed banks to avoid face-to-face meetings with borrowers. We remain hopeful that getting lenders and borrowers together at the same table will help prevent foreclosures and keep Oregonians in their homes.”

The mediation requirement will not end the foreclosure problem. Almost 29,000 Oregonians still remain more than 90 days in arrears on their mortgages. Many embattled homeowners have moved and cannot be located. Others lack the resources to pay even a modified mortgage. However, the recent change to the mediation law will result in a significant upswing in the number of face-to-face meetings between homeowners and lenders and that is certainly a step in the right direction.

If a foreclosure action has been initiated against you after August 4, 2013 and you are uncertain about whether or not your lender has complied with the requirements of the new mediation program, we would encourage you to contact us immediately. Alternatively, visit the Oregon Foreclosure Avoidance Program website for more information about the new mediation program.