In the wake of the worst financial crisis since the 1930's, Congress passed Dodd-Frank. This so-called "historic" bill was supposed to help us avoid another crisis and to provide us with reasonable regulation of Wall Street to avoid another meltdown. Last month finally the federal government proposed "new rules" to give homeowners more ways to avoid foreclosure and get an accurate accounting of their monthly mortgage payments. After President Obama's failed HAMP & mortgage modification program, one must ask if these new "rules" will be as advertised i.e. real consumer rights and benefits.
These new rules are being setup by the Consumer Financial Protection Bureau (setup under Dodd-Frank) and require mortgage servicers to give all borrowers standardized monthly statements and warn borrowers about interest rate or insurance change. In reality, this means a new thick booklet is coming your way which is just as useful as the "disclosure" one receivers from the Banks re: bank fees for a checking account. Basically, nothing.
These new rules require mortgage servicers to make "good-faith efforts" (whatever that means) to contact borrowers at risk of foreclosure and give them "options" (what options??? HAMP.....) to avoid losing their homes. There are also stipulations for "improving" record-keeping and providing foreclosure "counseling" to those who need it (but not actual help). Finally, these rules have only been "proposed" and the Consumer Financial Protection Bureau is set to finalize them by January 2013.
Overall, these new rules are toothless and seek to literally paper over the failure of Congress to regulate an industry that has brought America to its knees. One can only look at the speed in which TARP was rushed through congress (about a month) compared to 4 years it took Congress to write Dodd-Frank much less actually put this act into effect. It does not take a genius to figure out who runs Congress (Wall Street) and who is getting shortchanged (consumers). In February, the nation's five largest mortgage lenders agreed to overhaul their mortgage servicing practices and pay $25 billion to U.S. states to help those who lost their homes or face foreclosure. No one has seen a penny of this money and no one will probably see any of it either as this settlement was just another gimmick by Democrats and Republicans to show the voters that they are "doing something" while in reality they are all standing in line for campaign donations!
The facts are clear. As it stands, nearly 8 million Americans have faced foreclosure since the housing bubble burst in late 2006. As a result, nearly 1.5 million people filed for Bankruptcy in 2011 alone. Many homeowners have lost their home to dirty bank tactics such as "robo-signing" of documents to approve foreclosures and outright fraud emanating from the Banks' loan modification programs.In sum, the Consumer Financial Protection Bureau is a good idea on paper as it is setup to supervise U.S. payday lenders, mortgage companies and private student lenders. It also can write rules to supervise big lending companies. However, as with everything else, the key to success is action and so far the Consumer Financial Protection Bureau has not lived up to the hype.
If you are facing a foreclosure, contact our office for a Free Consultation on how to avoid the pitfalls of the foreclosure process. If you are considering Bankruptcy, contact our office for a Free Consultation we provide Chapter 7, Chapter 13 and Chapter 11 Bankruptcy services. We at Abbasi& Associates have a great deal of practical legal experience in Bankruptcy and Civil Litigation and help you navigate the uncertainties of today.