By: Michael Powers

In December of 2013, the CFPD announced “a campaign to educate the public about the new protections provided by the Bureau’s mortgage rules.” The CFPS’s publication consists of lengthy educational materials for homeowners trying to avoid foreclosure. Among the materials in a “factsheet”, with detailed information on the new CFPB rules. Additionally, a “foreclosure checklist” has been included, which encourages troubled homeowners to “Take Control”, “Go Pro”, “Get it Done” and “Stand Up for Your Rights”.

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The most important document amongst the materials is 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. While the guide will prove helpful for professionals currently engaged in foreclosure prevention assistance, it will be very difficult for consumers to full understand and apply on their own. In fact, the guide is written in a manner which would best serves attorneys looking for causes of action against a lender who may be in violation of a homeowner’s rights as proscribed by the rules.

While the materials stop short of explicitly encouraging homeowners to sue their lenders, any savvy reader would certainly get the that impression. The materials cover new laws to protect distressed homeowners, and encourage them to seek professional assistance. The specific reference was “If you had a fire in your house, you’d call a professional firefighter.” The article then goes on to say that the “professional” they are referring to is a HUD approved housing counselor. But, how many homeowners today have already been down that road? How many homeowners have already tried for mortgage assistance on their own and/or with the assistance of a “housing counselor” and still find themselves facing foreclosure after multiple rejections?

Anyone who has been in the trenches of the mortgage crisis since the beginning knows that “going pro” means hiring an attorney. Years ago, that meant hiring a mortgage mitigation attorney to help you obtain a loan modification or foreclosure alternative. These days, however, the number of attorneys actually pursuing litigation against lenders is on the rise. Even more encouraging, is the fact that most of the lawsuits filed against lenders today are being settled before reaching trial. This fact can only mean that most of the lawsuits are being settled with offers which were sufficient to convince a homeowner to forego the trial. In other words, those homeowners were able to get a settlement that they considered meaningful and fair enough to create a lasting solution. So, for those attorneys, the new set of “rules” will only serve as further ammunition to create causes of action in their lawsuits against lenders.

So, do the new educational materials published by the CFPB encourage homeowners to sue their lenders? Well, that question is open to individual interpretation. On its face, the answer is “no”. However, for attorneys and professional housing counselors who have been helping homeowners for years, the materials could easily be interpreted that way.

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