The Consumer Financial Protection Bureau recently announced its
first enforcement action for alleged violations of the new
requirements imposed upon mortgage servicers regarding loss
mitigation applications submitted by borrowers. According to the CFPB, Michigan-based Flagstar
Bank took too long to process borrowers' applications for
relief from foreclosure, improperly denied loss mitigation
applications, and made numerous mistakes and miscalculations,
resulting in the denial of loss mitigation options that should have
been approved.
The January 10, 2014 amendments to Regulation X, which
implements the Real Estate Settlement Procedures Act
("RESPA"), requires mortgage servicers, among other
things, to promptly notify a borrower upon receipt of a loss
mitigation application that the application has been received and
whether it is complete. Once the application is complete, the
servicer is required to speedily evaluate the application and
notify the borrower of all
