CFPB Issues Proposed Rule To Amend The Mortgage Servicing Rules

On July 10, 2024, the Consumer Financial Protection Bureau ("CFPB") issued a Notice of Proposed Rulemaking ("NPRM") related to mortgage servicing rules. The proposed rule would amend various sections of Regulation X, 12 CFR Part 1042. The proposed rule would impact the mortgage foreclosure process, mainly by adding consumer protections when a borrower seeks loss mitigation.

The proposed rule seeks to streamline existing loss mitigation requirements to provide borrowers with quicker loss mitigation solutions. Most notably, the CFPB proposes to add a new defined term, "loss mitigation review cycle," which cycle would generally begin when a borrower made a request for loss mitigation assistance more than 37 days before a foreclosure sale. During a "loss mitigation review cycle," a servicer may not move forward with scheduling a foreclosure sale, nor advance the foreclosure action.