Two major consumer organizations are urging Congress to enact a national “Homeowner Bill of Rights” to reduce foreclosures, “stabilize local housing markets, and protect homeowners.”
Pointing out how the lack of lender regulation helped cause the Great Recession, and that lenders have been reluctant “to engage in good-faith loss-mitigation before beginning the foreclosure process,” — the Center for Responsible Lending and Consumers Union issued a joint policy brief they say can both protect homeownership without putting undue burden on lenders.
The proposal takes into account other regulations — such as California’s Homeowner Bill of Rights and the Consumer Financial Protection Bureau’s new lending rules.
It has four major points, none of which are particularly groundbreaking:
1. Lenders should be required to try to prevent foreclosures by “engag[ing] in loss mitigation activities.”
2. Servicers should not be allowed to “dual track” — that is, continue foreclosure proceedings while also claiming to process a request for a loan modification.
3. Lenders should have clear procedures and straightforward timelines for working with homeowners, including providing “detailed denial notices” (with affidavits — no robo-signing), and explaining the homeowners’ rights to appeal or request loss mitigation.
4. Homeowners should be able to halt a foreclosure sale when a servicer breaks the law.
None of that sounds terribly difficult: Help borrowers avoid foreclosures, don’t rush the process, be transparent about what’s happening and what the options are, and don’t break the law.