The CFPB is concerned that some mortgage servicers may be taking improper advantage of HAFs, resulting in a potential violation of the Real Estate Settlement Procedures Act (RESPA).
HAFs are designed to help homeowners who are struggling to make their mortgage payments. They are a form of assistance offered by the government or other agencies, often an escrow account, to cover mortgage costs for those facing financial hardship. Mortgage servicers are typically responsible for administering HAFs, as well as other services such as denial letters and modification documents.
The CFPB has reminded mortgage servicers that they must adhere to RESPA regulations and not take advantage of HAFs by charging consumers fees that are not allowed under RESPA. The bureau has advised mortgagors to be aware of any additional fees that may be charged in order to access HAFs.
The CFPB also reminds servicers of their responsibility to help homeowners access HAFs by providing them with the necessary information to do so. The bureau requires that servicers provide homeowners with a full accounting of all fees associated with accessing HAFs, such as origination fees, servicing fees, and application fees. Servicers should also educate homeowners about how to properly submit their applications and ensure that they can understand the terms of the HAF before committing to them.
In order to prevent possible violations, the CFPB also recommends that servicers regularly review their use of HAFs and evaluate whether they are complying with RESPA requirements. They should also update their procedures, documentation, and systems to ensure compliance with all RESPA rules and regulations.
In summary, the CFPB is warning mortgage servicers to ensure they comply with RESPA regulations when it comes to administering Homeowner Assistance Funds. The CFPB requires that servicers provide a full accounting of all fees associated with accessing HAFs and that they ensure homeowners understand the terms of the HAF before applying. The bureau is also advising servicers to regularly review their use of HAFs and update their procedures, documentation, and systems to ensure compliance with all RESPA rules and regulations. By doing so, mortgage servicers can protect themselves from potentially violating RESPA, allowing them to better assist homeowners struggling to make mortgage payments.
This article was contributed on Nov 02, 2023
