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August 02, 2016

CFPB outlines principles for foreclosure prevention

CFPB on Tuesday published an outline of its guiding principles for foreclosure prevention, which focus on access to information, transparency and affordability.

The principles were issued in light of the Treasury Department's temporary Home Affordable Modification Program being set to expire in January 2017. CFPB notes they are not legally binding but are intended to help create new foreclosure relief options in the aftermath of the financial crisis.

"We aim to help consumers avoid foreclosures, which upset their personal and financial lives," CFPB Director Richard Cordray said. "The modification program was put in place to provide alternatives to foreclosure. Our principles will serve as helpful guardrails for servicers, investors, and regulators to consider as we continue to protect consumers who are struggling to pay their mortgages."

The four principles are:

• Accessibility: Consumers must be able to access information about loss mitigation options and how to apply them.
• Affordability: Repayment plans and mortgage loan modifications must be designed with an eye to affordability for consumers.
• Sustainability: Loss mitigation options must be sustainable for the consumer throughout the remaining or extended loan term.
• Transparency: Consumers must get clear and concise information about what decisions servicers are making.

The Treasury Department, Department of Housing and Urban Development and the Federal Housing Finance Agency issued a joint white paper on lessons learned from the temporary program, including core principles they recommend for future loss mitigation frameworks.