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Will the CFPB’s mortgage education campaign encourage consumers to sue?

Posted in Mortgages

Last week, the CFPB announced that it has launched “a campaign to educate the public about the new protections provided by the Bureau’s mortgage rules.”   Consumers could, however, misinterpret the CFPB’s message as an encouragement to sue. 

The CFPB’s campaign consists of various educational materials. Among these materials is a factsheet on the new rules.  The fact sheet contains information intended to explain the ability to pay standard, qualified mortgages, and new servicing requirements.  Embedded in this information are statements that “[b]orrowers who fall behind now have more options to take control” and the CFPB “will stand with borrowers and homeowners to ensure financial institutions treat them properly.”  Such messages, while understandable given the CFPB’s consumer protection mission, could foster an adversarial climate between borrowers and their lenders and servicers and encourage consumers to precipitously seek legal recourse. 

The other educational materials released by the CFPB consist of:

  • A 104-page guide for housing counselors on the new servicing requirements that details the loss mitigation process, including a servicer’s liability for failure to comply with the loss mitigation rules, foreclosure prohibitions, rules on processing and applying payments, limits on fees and charges, the error resolution process, and requests for information and payoff statements
  • Tips” that tell a homeowner “how you can put the new mortgage rules to work for you,” “tips” that tell homebuyers “how the CFPB’s new rules help if you are shopping for a home loan,” and a “foreclosure checklist” for troubled borrowers to use to “[t]ake control to avoid foreclosure”
  • Mortgage-related questions and answers added to the CFPB’s “ask CFPB” webpage
  • A tool added to the CFPB’s website to help consumers find local housing counseling agencies
  • A summary of the CFPB’s “foreclosure avoidance procedures”