The Consumer Financial Protection Bureau (CFPB), once a formidable force in mortgage regulation, has seen its influence wane significantly in 2025. With substantial budget cuts and operational halts, the agency’s ability to enforce consumer protections has been severely compromised. This shift places the onus squarely on mortgage lenders, brokers, and servicers to uphold compliance standards in an increasingly deregulated environment.

The Dismantling of the CFPB

Recent administrative actions have led to a near-paralysis of the CFPB’s functions. Key developments include:

a) Suspension of enforcement actions and regulatory rulemaking.

b) Closure of the CFPB’s headquarters in Washington, D.C.

c) Attempts to terminate a significant portion of the agency’s workforce.

These measures have effectively left the agency unable to perform its core duties, including oversight of mortgage lending practices.

Implications for Mortgage Industry Stakeholders

The absence of a robust federal regulatory presence introduces several challenges:

a) Increased Risk of Non-Compliance: Without the CFPB’s guidance, lenders must independently ensure adherence to fair lending laws and other regulations.

b) Potential for Predatory Practices: A lack of oversight may embolden unscrupulous actors, leading to a resurgence of harmful practices reminiscent of the pre-2008 era.

c) State-Level Regulatory Patchwork: In the CFPB’s absence, state regulators may step in, resulting in a fragmented compliance landscape with varying standards across jurisdictions.

Proactive Measures for Compliance

In this new regulatory climate, mortgage professionals should consider the following strategies:

a) Strengthen Internal Compliance Programs: Develop comprehensive policies and procedures that go beyond minimum legal requirements to ensure ethical lending practices.

b) Invest in Training and Education: Regularly train staff on compliance matters, emphasizing the importance of fair lending and consumer protection.

c) Engage with State Regulators: Establish relationships with state regulatory bodies to stay informed about local compliance expectations and changes.

d) Monitor Industry Developments: Stay abreast of legal and regulatory updates, as the landscape may continue to evolve rapidly.

Conclusion

The scaling back of the CFPB represents a significant shift in the regulatory environment for the mortgage industry. While this may reduce certain compliance burdens, it also increases the responsibility of industry participants to self-regulate and maintain high standards of conduct. Proactive engagement with compliance best practices is essential to protect consumers and uphold the integrity of the mortgage market in this new era.

For further information on maintaining compliance in a deregulated environment, industry professionals are encouraged to consult legal experts and stay connected with industry associations that provide guidance and resources.

The Federal Housing Finance Agency (FHFA) is tightening the screws on mortgage fraud—and it’s not just talk. With a public fraud tip line now live and discussions underway about loan recall mechanisms for fraudulent originations, industry stakeholders should be paying close attention.

This isn’t a symbolic gesture. It’s a signal: the FHFA wants accountability, and it’s shifting from passive oversight to active enforcement. If you’re a broker, lender, or servicer, you need to understand what this means for your business—and what to do next.

The New FHFA Posture

Under Director Bill Pulte, the FHFA is changing its stance. The agency has launched a public email-based tip line—[email protected]—welcoming anonymous reports of mortgage fraud across the origination and servicing chain.

It’s a clear warning: business-as-usual risk controls won’t cut it. Pulte, who comes from a business background, is framing this initiative as a return to foundational trust in the mortgage finance system. Fraud, once seen as just another cost of doing business, is being reframed as a systemic threat.

But more than rhetoric, the FHFA is reportedly exploring ways to recall loans found to have been originated fraudulently. That could mean massive repurchase risks, clawbacks, or worse—for lenders that aren’t properly vetting applications and broker networks.

Why It Matters Now

The timing isn’t random. Market pressure is high. Volume is down, and margins are thin. In these environments, risk tolerance quietly increases, corners get cut, and oversight gaps widen. Fraud follows.

According to CoreLogic and other analytics firms, red flags like occupancy misrepresentation and income falsification have ticked up post-2020. Fraud risk in low-doc and non-QM segments has grown steadily.

The FHFA is trying to put the brakes on that before it turns systemic. And that puts the onus squarely on you—brokers, originators, underwriters, and servicing partners.

Top Fraud Risks in 2025

While the classic schemes persist—stated income abuse, straw buyers, identity manipulation—the current landscape has a few standouts:

a) Occupancy Fraud: Especially common in investor-heavy markets. Borrowers claim primary residence status to secure better terms, exposing lenders to mispricing and higher risk.

b) Synthetic Identities: With AI-generated documentation becoming more common, detecting fake borrowers is no longer straightforward.

c) Third-Party Originator Risk: Smaller brokers and correspondent partners may lack robust compliance controls, creating blind spots for larger lenders buying or funding those loans.

d) Servicing-Level Misreporting: Forbearance abuse and inaccurate loss mitigation records can trigger violations under GSE guidelines.

What Lenders and Brokers Should Be Doing

The FHFA’s message is clear: act now, or face consequences. Here’s what institutions should be prioritizing:

a) Reinforce Third-Party Oversight

If you’re buying loans from smaller shops or correspondent partners, it’s time to revisit your approval and audit procedures. Is your QC just checking boxes, or is it identifying behavioral red flags?

b) Upgrade Fraud Detection Tech

Traditional fraud scoring tools are no longer sufficient. Look for machine learning solutions that detect pattern anomalies across large datasets—particularly useful for spotting synthetic identity use or anomalous income trends.

c) Internal Tip Lines & Ethics Programs

If FHFA is inviting whistleblowers, you should be too. Internal fraud-reporting mechanisms can surface issues early—and show regulators you’re serious about compliance.

d) Loan Repurchase Preparedness

Review your exposure. If FHFA follows through on fraudulent loan recalls, how quickly can you identify affected loans? Are you carrying buyback reserves? What does your indemnification language look like?

e) Staff Training & Broker Education

Fraud prevention starts with frontline staff and broker partners. Make sure everyone knows the latest red flags and understands the legal and financial consequences of negligence—or worse, complicity.

A Broader Shift Toward Accountability

The FHFA’s new fraud strategy isn’t isolated. It aligns with a broader movement in financial services—one that demands more transparency, tighter controls, and proactive governance. The days of reactive compliance are ending. Regulators want institutions that are actively managing risk—not just documenting it.

The agencies are tired of seeing fraud treated as an externality. They’re going to start treating it like a breach of trust. And that means more investigations, more enforcement, and potentially more headline risk.

Final Thought

This is a wake-up call. Fraud is no longer a hidden cost—it’s a compliance threat, a reputational hazard, and now, a repurchase risk. The smartest lenders and brokers will use this moment to get ahead of the curve, not wait until the FHFA knocks on the door. The question isn’t whether fraud is in your pipeline. The question is—what are you doing about it?

In the wake of the devastating wildfires that tore through Los Angeles County in January 2025, the Federal Housing Administration (FHA) has taken decisive action to support both mortgage lenders and affected borrowers. By waiving certain quality control (QC) review requirements, the FHA is offering practical relief during a time of widespread financial and emotional hardship.

What’s Changing—and Why It Matters

Normally, lenders are required to conduct QC reviews on FHA-insured mortgages that become 60 days delinquent within the first six months after closing—known as early payment defaults (EPDs). These reviews are crucial for detecting potential flaws in loan origination, underwriting, or borrower misrepresentation. However, when disaster strikes, the causes of delinquency often lie far beyond the lender’s or borrower’s control.

Recognizing this, the FHA has waived the QC review requirement for loans affected by the January 2025 wildfires—an essential move for easing the burden on both borrowers and servicers.

Who Qualifies for the Waiver?

This waiver is narrowly tailored to assist those directly impacted by the disaster. Specifically, it applies to:

a) FHA-insured mortgages located in Los Angeles County, which was declared a Presidentially Declared Major Disaster Area (PDMDA).

b) Loans that were closed prior to January 7, 2025, the official disaster start date.

c) Loans that became 60 days delinquent between February 1 and July 31, 2025.

The FHA’s intent is clear: to shield both borrowers and lenders from undue penalties or scrutiny when delinquencies are a direct result of catastrophic events—not financial missteps or procedural errors.

Foreclosure Relief Extended

Adding another layer of support, HUD has extended the foreclosure moratorium for affected areas by an additional 90 days. Originally set to expire on April 7, the moratorium now runs through July 7, 2025. During this time, mortgage servicers are prohibited from initiating or completing foreclosure actions on affected FHA-insured single-family mortgages.

This extension gives homeowners vital breathing room to recover, rebuild, and stabilize their finances.

What Lenders and Servicers Still Need to Do

Despite the waiver, mortgage professionals must remain vigilant. Lenders are still expected to:

a) Report all delinquencies to the Single Family Default Monitoring System (SFDMS).

b) Offer appropriate loss mitigation options to affected borrowers.

c) Remain compliant with all other FHA servicing guidelines.

The waiver does not absolve lenders of their broader responsibilities—it simply acknowledges the exceptional nature of the current situation.

A Measured but Compassionate Response

The FHA’s waiver is a prime example of regulatory flexibility used wisely. It offers relief without compromising the integrity of the mortgage system. For borrowers, it’s a compassionate gesture. For lenders, it’s a practical adjustment. For the mortgage ecosystem at large, it’s a reminder that even behind the flames, resilience is possible—with the right support.

In his annual letter to shareholders, Jamie Dimon, CEO of JPMorgan Chase, has once again spotlighted the intricate web of mortgage regulations that he believes are inflating costs for borrowers and stifling market growth. Dimon asserts that by streamlining these regulations, particularly around origination, servicing, and securitization, the average mortgage could see a reduction of 70 to 80 basis points. This potential decrease translates to significant savings for homeowners and could invigorate the housing market. ​

The Case for Regulatory Simplification

The mortgage industry is governed by a complex array of rules designed to ensure stability and protect consumers. However, Dimon argues that the current regulatory framework has become overly cumbersome, leading to increased operational costs for lenders—costs that are inevitably passed on to borrowers. By simplifying these regulations, he suggests that the lending process could become more efficient, reducing expenses and making homeownership more accessible. ​

Potential Benefits for the Housing Market

The Urban Institute supports Dimon’s perspective, estimating that such regulatory reforms could result in an additional one million mortgage originations annually. This surge could particularly benefit low- to moderate-income families, enabling more individuals to achieve homeownership and build wealth. Furthermore, a more dynamic housing market could stimulate related sectors, contributing positively to the broader economy.

Addressing Concerns and Challenges

While the prospect of reduced mortgage costs is appealing, it’s essential to approach regulatory changes with caution. Regulations play a crucial role in maintaining the integrity and stability of the financial system. Any efforts to simplify them must ensure that consumer protections remain robust and that the risk of financial crises is not inadvertently increased. Striking the right balance between efficiency and security will be key to the success of any proposed reforms.​

Looking Ahead

Dimon’s call for regulatory simplification has reignited discussions among policymakers, industry leaders, and consumer advocates. As these conversations evolve, it’s imperative for stakeholders to collaborate in crafting solutions that enhance efficiency without compromising safety. For borrowers, the potential for reduced mortgage costs is an encouraging prospect, but the path to achieving it must be navigated thoughtfully and deliberately.

Source:https://noteservicingcenter.com/jamie-dimon-advocates-for-regulatory-changes-to-reduce-mortgage-costs-by-80-basis-points/

The regulatory tide is never still in the mortgage world—and the legacy of Trump-era housing policies continues to ripple across the lending industry in unexpected ways. From changes in federal agency leadership to shifts in enforcement priorities, lenders are still navigating the consequences of these decisions, often without a clear map.

So, what should you be watching right now?

FHA and GSE Policy Shifts: A Continuing Balancing Act

One of the most significant impacts of the Trump administration’s housing policy lies in the push for shrinking the federal government’s footprint in the housing market. This included efforts to privatize Fannie Mae and Freddie Mac, scale back the Federal Housing Administration (FHA), and revise underwriting standards for government-backed loans.

While full privatization stalled, the regulatory groundwork laid during that period continues to influence today’s policy landscape. For lenders, that means a cautious approach to GSE guideline changes and a need to stay nimble as both Fannie and Freddie revise risk-based pricing frameworks and revisit loan eligibility standards.

Rollbacks in Fair Lending Oversight

Another key legacy is the regulatory rollback on fair lending enforcement. The Trump-era CFPB placed less emphasis on disparate impact analysis and scaled back investigations. However, under the Biden administration, we’ve seen a renewed commitment to fair lending compliance—placing lenders who grew comfortable under the old regime in a vulnerable position.

Today’s environment demands heightened vigilance. Lenders must now reevaluate policies and algorithms, especially those powered by AI, to ensure there’s no unintentional bias—a growing area of scrutiny for regulators.

Environmental Rules and Housing Affordability

Beyond the agencies directly tied to mortgage lending, broader policies also left a mark. The previous administration’s rollback of environmental regulations may have temporarily eased land development constraints. However, with reversals now in play, especially around water rights and building standards, developers and lenders may soon face renewed challenges in project approvals and appraisal processes.

Housing affordability continues to be a flashpoint. While the Trump administration attempted to reduce regulatory burdens to boost housing supply, the net impact remains debatable—particularly in the wake of supply chain disruptions and escalating construction costs.

What Lenders Should Be Doing Now

Understanding how these regulatory legacies are playing out is not just a matter of compliance—it’s a strategic imperative.

a) Revisit your compliance frameworks to ensure alignment with revived enforcement efforts from the CFPB and HUD.

b) Keep close tabs on GSE updates, particularly around loan-level pricing adjustments and appraisal guidelines.

c) Evaluate technology use in underwriting and servicing, especially tools driven by algorithms and AI, for fair lending compliance.

d) Anticipate environmental and zoning-related regulatory swings that could impact development pipelines and financing options.

In short, the past isn’t finished shaping the present. Proactive monitoring and thoughtful policy reviews can help lending institutions steer through shifting sands and stay one step ahead of risk.

Source: https://www.housingwire.com/articles/updated-list-of-all-trumps-actions-that-impact-housing/

The Consumer Financial Protection Bureau (CFPB) has long been a powerful force in regulating financial institutions, but its future is now uncertain. In a surprising turn of events, the agency has dropped multiple enforcement lawsuits, including cases against Rocket Homes Real Estate, Vanderbilt Mortgage & Finance, Capital One, and the Pennsylvania Higher Education Assistance Agency. These reversals signal a major shift in the CFPB’s approach—and raise serious questions about its role moving forward.

A Drastic Shift in Enforcement

The CFPB’s decision to dismiss these cases with prejudice means they cannot be refiled. These cases were originally launched in the final days of the Biden administration under then-Director Rohit Chopra. However, after Chopra was fired by President Trump on February 1, the CFPB began rolling back some of its most aggressive actions.

Jonathan McKernan, a former member of the FDIC board, has been nominated by Trump to become the agency’s permanent director. In his testimony before the Senate Banking Committee, McKernan was highly critical of the CFPB’s past actions, stating that the agency has “gotten in the way of its own mission.”

Regulation or Overreach?

McKernan argued that the CFPB has overstepped its legal authority, accusing it of acting in a politicized manner and expanding its power beyond its intended limits.

“It has offended our basic notions of fairness and due process when it has regulated by enforcement,” McKernan said.

Critics of the CFPB have long argued that its aggressive regulatory tactics increase costs for consumers and reduce competition. McKernan echoed this sentiment, stating that consumers have suffered from “higher prices and reduced choice” due to the Bureau’s actions.

The Controversial Lawsuits Among the dropped cases, two in particular drew national attention:

a) Rocket Homes Real Estate: The CFPB accused the company of pressuring real estate agents to steer buyers toward Rocket Mortgage, limiting access to other lending options and down payment assistance programs. Rocket Homes denied the claims, arguing that its business practices were fully compliant.

b) Vanderbilt Mortgage & Finance: The CFPB alleged that Vanderbilt, a Berkshire Hathaway-owned manufactured home lender, failed to verify borrowers’ financial information before issuing mortgages—practices similar to those that contributed to the 2008 foreclosure crisis. Vanderbilt strongly pushed back against these allegations.

With these cases now dismissed, critics of the CFPB see this as a long-overdue course correction, while supporters worry that consumer protections are being eroded.

What’s Next for the CFPB?

The CFPB’s latest moves raise an important question: Will the agency continue to regulate aggressively, or will it step back under new leadership?

McKernan’s nomination suggests a more business-friendly approach, focused on reducing regulatory burdens rather than expanding enforcement actions. However, with the 2024 presidential election approaching, the agency’s long-term direction could depend on who controls the White House and Congress.

One thing is clear—the CFPB is at a crossroads, and its survival in its current form is far from certain. What do you think? Should the CFPB continue its aggressive oversight, or is it time for a new approach?

Source: https://www.scotsmanguide.com/news/cfpb-drops-cases-against-rocket-vanderbilt-mortgage/

Cyber threats are on the rise, and Fannie Mae isn’t taking any chances. With its new Information Security and Business Resiliency Supplement, Fannie Mae is requiring lenders and servicers to strengthen their cybersecurity measures and disaster recovery plans.

Mortgage lenders handle vast amounts of borrower data, making them prime targets for hackers. A single cyberattack can disrupt operations, compromise sensitive information, and lead to serious financial and legal consequences. That’s why Fannie Mae now requires strict security and business resiliency protocols—and failure to comply could put your business at risk.

Here’s what you need to know to stay ahead.

Cybersecurity: No Longer Optional Fannie Mae now requires all lenders and servicers to have a comprehensive Information Security Program that follows top industry standards, such as the NIST Cybersecurity Framework or ISO 27001. Key requirements include:

a) Multi-Factor Authentication (MFA) – Strengthening logins to prevent unauthorized access.

b) Access Controls – Limiting employee access to only the data they need.

c) Regular Security Assessments – Ensuring ongoing protection through annual reviews.

d) Vulnerability Management – Identifying and patching system weaknesses before they are exploited.

The mortgage industry has already seen an increase in ransomware attacks, data breaches, and phishing scams. With these new requirements, Fannie Mae is making it clear: lenders must take cybersecurity seriously or face consequences.

Business Continuity Planning: Be Ready for the Unexpected

Cyber threats aren’t the only risk. Natural disasters, vendor disruptions, and technology failures can cripple a mortgage business if there’s no plan in place. That’s why Fannie Mae is requiring lenders to maintain a Business Continuity Plan (BCP) and Disaster Recovery Procedures (DRP) to ensure smooth operations, no matter what happens. Your BCP must include:

a) Backup Systems & Data Protection – Ensuring quick recovery in case of outages.

b) Crisis Management & Communication Plans – Keeping teams and borrowers informed.

c) Regular Testing & Updates – Plans must be reviewed and tested annually.

A well-prepared business can recover faster and minimize financial and reputational damage. Without a strong BCP, even a minor disruption could have major consequences.

The 36-Hour Cyber Incident Rule

If a lender experiences a cybersecurity incident, such as a data breach, ransomware attack, or unauthorized access to borrower information, they must report it to Fannie Mae within 36 hours.

Fannie Mae may take immediate action, such as:

a) Blocking system access to prevent further damage.

b) Requiring security attestations before restoring system connections.

c) Requesting investigation details to assess the extent of the breach.

This strict reporting rule highlights the urgency of cybersecurity readiness. A slow response could lead to business interruptions, financial penalties, and loss of trust from borrowers.

Why This Matters

While these new security and resiliency requirements may seem like a challenge, they also present an opportunity. Lenders who proactively strengthen their cybersecurity and business continuity plans can:

a) Reduce risk and avoid costly cyber incidents.

b) Increase borrower trust by demonstrating strong security measures.

c) Ensure compliance with Fannie Mae’s evolving requirements.

The mortgage industry is facing a digital security wake-up call, and Fannie Mae is leading the charge. The question is: Will your business be ready?

Source: https://www.fanniemae.com/media/54736/display

The U.S. housing market is undergoing a major shift as more homeowners find themselves locked into mortgage rates of 6% or higher. According to real estate brokerage Redfin, 17.2% of homeowners now have a mortgage rate of at least 6%, up from 12.3% in late 2023. This marks the highest percentage since 2016 and signals a change in how homeowners, buyers, and renters navigate the market.

For years, many homeowners stayed put, unwilling to trade their low pandemic-era mortgage rates for today’s higher borrowing costs. This “lock-in effect” reduced housing supply and kept prices high. However, new data suggests that this trend is starting to ease, creating fresh opportunities in both the homeownership and rental markets.

Breaking the Lock-In Effect

The pandemic created historically low mortgage rates, with some homeowners securing rates as low as 2.65%. As a result, many were reluctant to sell their homes when rates started rising, leading to a tight housing supply and continued price growth. But now, that hesitation is fading.

According to Redfin, more homeowners are deciding to move despite high rates. Life circumstances—such as job relocations, growing families, or financial shifts—are forcing many to reconsider their options. Some homeowners are even leveraging the equity gained from rising home values to make their next move more affordable.

Home prices have surged over the last few years, giving many homeowners financial flexibility. Data from the Federal Reserve Bank of St. Louis shows that the average U.S. home price was $383,000 in early 2020. By the end of 2024, that number had jumped 33% to $510,300. This equity growth allows sellers to make a profit even in a higher-rate environment, especially if they are downsizing or moving to a more affordable location.

Homebuying and Mortgage Demand in a High-Rate Market

With mortgage rates remaining above 6% for over two years, affordability remains a challenge for many buyers. According to the Mortgage Bankers Association (MBA), mortgage applications for home purchases have declined, while refinance applications surged 12% in early 2024 as homeowners looked for opportunities to adjust their loans.

Joel Kan, MBA’s Deputy Chief Economist, noted that the average loan size for home purchases has increased since the beginning of the year, reflecting rising home prices. However, Freddie Mac Chief Economist Sam Khater pointed out that mortgage purchase applications are slightly above last year’s levels, suggesting that demand still exists despite affordability concerns.

Many buyers are adjusting their expectations, looking at smaller homes, more affordable neighborhoods, or alternative financing options. Adjustable-rate mortgages (ARMs) and lender incentives are becoming more popular as buyers seek creative solutions to enter the market.

The Rise of the Build-to-Rent Market

As homeownership becomes less attainable for some, the rental market is expanding—especially the build-to-rent sector. A report from real estate listing platform Point2Homes shows that over 110,000 single-family rental homes are currently under construction across the U.S. Texas leads the nation with nearly 22,000 build-to-rent homes in development, followed by Arizona, Florida, and North Carolina.

Build-to-rent communities are designed specifically for renters and offer amenities similar to traditional homeownership, such as private yards and garages. These communities appeal to families and individuals who prefer the flexibility of renting without the financial burden of a mortgage.

Doug Ressler, manager of business intelligence at Yardi Matrix, highlights the growing affordability gap between renting and buying. “Recent reports indicate that renting can save one around $1,000 per month compared to buying. This is largely due to high mortgage rates and elevated home prices,” he said.

Additionally, more renters are choosing to rent by preference rather than necessity. In 2024, 36% of build-to-rent residents identified as renters by choice, up from 27% in 2023. This shift reflects changing attitudes toward homeownership and the growing appeal of rental living.

Opportunities in a Changing Market

Despite rising mortgage rates, the housing market is not stagnant—it is evolving. More homeowners are making moves, buyers are adjusting their strategies, and the rental market is expanding. For real estate professionals, lenders, and investors, this presents new opportunities.

Sellers with significant home equity may find it worthwhile to sell, even in a higher-rate environment. Buyers who remain flexible and explore financing alternatives can still enter the market. Investors and developers can capitalize on the demand for rental housing, particularly in the build-to-rent sector.

While challenges remain, those who adapt to these changes can position themselves for success. The market is shifting, and with it comes opportunity for those ready to embrace it.

Source: https://www.zerohedge.com/markets/17-percent-us-homeowner-mortgages-are-6-percent-interest-or-higher-report

Homeowners struggling with mortgage payments may soon have stronger protections under new rules proposed by the Consumer Financial Protection Bureau (CFPB). The proposed changes, announced in Washington, D.C., aim to streamline mortgage assistance, reduce unnecessary foreclosures, and improve borrower communication.

If finalized, these rules would require mortgage servicers to focus on helping homeowners before resorting to foreclosure, while also simplifying assistance programs by reducing paperwork. Here’s a breakdown of the key provisions and what they mean for mortgage professionals.

Key Changes in the CFPB’s Proposed Rules

1. Foreclosure Prevention Becomes the Priority

Under the new rules, servicers must prioritize helping borrowers who request assistance before initiating foreclosure proceedings. A foreclosure can only proceed if:

a) All possible assistance options are exhausted, or

b) The borrower stops responding to the servicer’s outreach efforts.

Additionally, the proposal limits fees that servicers can charge borrowers while they are being evaluated for assistance. This measure is intended to incentivize servicers to act quickly and fairly when reviewing borrower requests.

2. Paperwork Requirements Streamlined

Currently, servicers cannot evaluate borrowers for assistance without a complete application containing all necessary information for every available option. This rigid process can delay relief and increase the risk of foreclosure.

The CFPB’s proposal allows servicers to review each option individually, making it possible to approve assistance faster and with fewer documentation hurdles. Studies have shown that simplified loan modification processes significantly improve homeowners’ ability to keep their homes.

3. Enhanced Borrower-Servicer Communication One major challenge in foreclosure prevention is poor communication between borrowers and servicers. The proposed rule would:

a) Improve early delinquency notices by including details about loan investors and available assistance options.

b) Require servicers to provide tailored notices that clearly outline borrowers’ next steps to receive aid.

By ensuring borrowers understand their options early, the CFPB hopes to reduce avoidable foreclosures.

4. Multilingual Access to Critical Information

To better serve diverse communities, the CFPB wants to ensure borrowers receive important mortgage assistance information in languages they understand. The new rule would require:

a) Borrowers who received marketing materials in another language to have the right to request assistance in that same language.

b) All borrowers to receive notices in both English and Spanish as a default.

c) Oral interpretation services to be made available for borrowers during phone calls with servicers.

By eliminating language barriers, these changes could help more homeowners successfully navigate financial hardships and avoid foreclosure.

Lessons from the Pandemic: A More Flexible Approach to Assistance

The CFPB’s proposal is shaped by lessons learned during the COVID-19 pandemic, when millions of homeowners faced financial hardship. During the crisis, the CFPB temporarily relaxed mortgage servicing rules, allowing servicers to quickly provide forbearance and loan modifications without extensive documentation.

Both borrowers and servicers benefited from this streamlined approach, leading the CFPB to consider making some of these temporary changes permanent in the new rule.

What Happens Next?

The CFPB is seeking public comments on the proposal until September 9, 2024. If the rule is finalized, mortgage servicers will need to adjust their procedures to comply with the new borrower protection requirements.

Final Thoughts

These proposed rules reflect the CFPB’s commitment to preventing unnecessary foreclosures while also making the mortgage servicing process more efficient and responsive. Servicers must be prepared to adopt new communication, compliance, and assistance strategies to align with these regulations.

For mortgage professionals, staying informed and proactively updating servicing processes will be key to ensuring compliance and delivering better outcomes for borrowers.

Source: https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rules-to-help-homeowners-avoid-foreclosure/

Texas is taking a firm stance on mortgage borrower protections with newly adopted rules set to take effect on November 23, 2024. The Texas Department of Savings and Mortgage Lending (DSML) has introduced significant changes impacting mortgage loan companies, mortgage bankers, individual residential mortgage loan originators, and mortgage servicers.

From disclosure updates to new rules on trigger leads and reportable incidents, mortgage professionals operating in Texas must ensure compliance with these regulations. Here’s what you need to know.

Key Changes for Mortgage Loan Originators, Companies, and Bankers

1. Revised Disclosure Requirements

a) The Mortgage Company Disclosure and Mortgage Banker Disclosure have been updated for greater clarity and readability.

b) Conditional Pre-Qualification and Conditional Approval Letters now require the signature of the individual residential mortgage loan originator (if issued).

c) All notices must now use a specified font in at least 12-point size to improve readability.

2. Stricter Rules on Trigger Leads

Trigger leads—purchased data from credit bureaus identifying consumers who recently applied for credit—are now under tighter scrutiny. The DSML has classified misleading or deceptive use of trigger leads as a fraudulent practice.

To comply, mortgage professionals must clearly state:

a) They are not affiliated with the creditor to whom the consumer applied.

b) The name of the mortgage loan originator and their associated mortgage company or banker.

c) How they obtained the consumer’s contact information.

d) That the purpose of the communication is to solicit new business.

Violating these requirements could result in severe regulatory penalties.

3. Expanded Licensing Flexibility for Loan Originators

Mortgage loan originators may now be sponsored by multiple mortgage companies or bankers. However, they must comply with specific application, disclosure, and representation requirements to ensure transparency and consumer protection.

Updates for Mortgage Servicers

1. Adjusted Disclosure Requirements

Previously, the Mortgage Servicer Disclosure was required on all borrower correspondence. Under the new rules, it is now only required on the first notice informing borrowers of the servicer responsible for their loan.

Additionally, the new readability rule applies, requiring all notices to be provided in a specified font and at least 12-point size.

New Reporting Requirements for Mortgage Companies, Bankers, and Servicers Texas is stepping up its oversight of risk events that could impact lenders and consumers. Under the new rules, companies must now report “reportable incidents” to the DSML. These incidents fall into two categories:

a) Security Events – Unauthorized access to information systems or customer data.

b) Catastrophic Events – Any unforeseen occurrence (other than a security event) causing severe disruption or financial risk.

Reporting Requirements:

a) Initial report must be filed with the DSML within 30 days of the incident.

b) A root cause analysis must be submitted within 120 days, detailing:

1) The nature and impact of the event.

2) The number of affected Texas residents.

3) Actions taken to address the incident.

4) Planned future measures.

5) A designated point of contact for regulatory inquiries.

What This Means for Mortgage Professionals

Texas joins other regulators, including the CFPB and California’s DFPI, in tightening consumer mortgage protections. Lenders and servicers operating in Texas must ensure their disclosure practices, lead generation tactics, and incident response protocols are fully aligned with the new regulations.

Non-compliance isn’t an option. Mortgage companies need to adapt their operations now to avoid penalties and maintain trust with borrowers.

Final Thoughts

With these sweeping changes, Texas is reinforcing its commitment to transparency, fair lending, and consumer protection in the mortgage industry. Mortgage professionals must stay ahead by reviewing their compliance strategies and implementing the necessary updates before the November 23 deadline.

Would you like to ensure compliance? Reach out to Synergy for expert guidance on navigating regulatory changes efficiently.

Source: https://natlawreview.com/article/texas-passes-law-expanding-mortgage-borrower-protections