Prospect of a loan modification before foreclosure, new rules in 2014 could protect you
Since 2008 many homeowners watched as property values plummeted. During this time, many homeowners were also saddled with second mortgages and/or adjustable rate mortgages, where their mortgage rates had adjusted upwards. With most banks requiring as a condition of refinancing that the property not be under-water or have a higher loan balance than the market value of the home, struggling borrowers had few options in selling their devalued homes and/or alleviating financial strain.
The solution for many homeowners came in the form of loan modifications or a modification of the promissory note to a lower interest rate. For many struggling homeowners, loan modifications became a prospect of hope towards saving their homes. However, many homeowners across the country trying to save their homes faced deceit in the wake of 2008 when their pending modifications ended without explanation or by means of foreclosure.
Starting in January 2014, the Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), will enact new mortgage rules that are aimed at reducing runarounds and painful surprises that have hurt many homeowners during and after the financial crisis.
Some highlights from the new rules for families and homeowners are listed below:
For more information regarding the new rules, please follow this link to the CFPB website: