Yes, your mortgage company does have to follow rules and give you an answer when you request a loan modification or other loss mitigation option to avoid foreclosure. Starting on January 10, 2014, the Consumer and Financial Protection Bureau (CFPB) implemented new mortgage loan servicing rules that apply to all but a few small mortgage loan servicers. These rules require mortgage loan servicers to make available to all struggling homeowners information about available options to avoid foreclosure. While not all mortgage loan servicers offer foreclosure prevention options, also called “loss mitigation” options, most do, and now they must let you know what those options are.
Usually, in order to take advantage of a loss mitigation or foreclosure prevention option a mortgage loan servicer will require the struggling homeowner to fill out a form, called a Request for Mortgage Assistance (RMA). Most will also require you to provide confidential financial information such as proof of income, tax returns, and bank statements. Usually a RMA will list most of the documents you must provide. The RMA and supporting documents are your “loss mitigation application.” The mortgage loan servicer will use this information to determine whether you legitimately fell behind and whether you qualify for a foreclosure prevention option such as a loan modification. Once a homeowner applies for a loss mitigation option, the Servicer is required to follow important timelines so that homeowners are not left in limbo for weeks and months.
In very general terms there are several important deadlines for servicer action that homeowners should know. First, the servicer must acknowledge receipt of the homeowner’s request for a loss mitigation option, including a loan modification, within five business days. Within the same five days, the Servicer must also conduct an initial review of the homeowner’s financial packet and notify the homeowner if the packet is complete. If the packet is not complete, the servicer must tell the homeowner in writing what additional document it needs to complete the loss mitigation application.
Second, the Servicer must complete its evaluation of a homeowner’s application within 30 days of receiving a complete financial packet and review the application for all available loss mitigation options.
Third, if the servicer requests additional financial information to complete the application, the servicer must allow the homeowner a reasonable time to provide that additional information.
Fourth, if the homeowner is denied a request for mortgage assistance, the servicer must provide the homeowner a written notice with an explanation of the reason for denial. The notice must also tell the homeowner of their right to appeal the denial. The servicer must allow the homeowner 14 days to request an appeal. If the homeowner is offered a loss mitigation option but denied another better option, the homeowner still has the right to appeal.
Finally, if the homeowner is approved for a mortgage assistance option, the servicer must allow the homeowner 14 days to accept or reject the offer from the date the servicer provides the homeowner notice of approval.
If the homeowner is in foreclosure in Maine, these deadlines may change depending on where in the foreclosure process the homeowner is.
Even if your mortgage loan servicer changes, you may have important rights to have your financial packet evaluated.
It is important to keep good records when you are applying for loss mitigation option. Always keep a complete copy of all documents sent to your loan servicer including proof of mailing, fax or email. Keep copies of all correspondence received from the loan servicer. Finally, keep a log of all phone calls that includes the date of the call, the person with whom you spoke, and the subject of the call.
These rules are intended to ensure that mortgage loan servicers act diligently and fairly with struggling homeowners. If you are struggling to pay your home mortgage loan, or you have already fallen behind, these rules probably apply to you. If you believe your mortgage loan servicer has broken these rules, contact us for a free consult. Your rights under these rules may have been violated.
We encourage all struggling homeowners to get immediate assistance with completing their loss mitigation application. Completing the application can be complicated and difficult. All Maine homeowners are eligible for free assistance with their application from trained Maine nonprofit housing counselors. For help from a free Maine housing counselor call 1-888-664-2569. But, if you think your situation needs legal analysis of your circumstances, your financial situation, and your rights, we can provide you with that help. We can provide a no risk half hour consult and may be able to offer to take on your case for a reduced fee.
Let us know if we can help you.