Alert March 20, 2012

New Rules Planned for Force-Placed Insurance and ARM Disclosures

In his speech at the annual National Association of Attorneys General meeting, Richard Cordray announced that the CFPB plans to issue mortgage servicing rules within the next 12 months to impose new limits on force-placed insurance products, to require servicers to simplify and improve the billing statements provided to consumers and to require additional disclosures for consumers on adjustable rate mortgages.  As to the latter, Mr. Cordray further explained that the new rules will require servicers to notify consumers months ahead of their first interest rate adjustment that their interest rate will increase and also disclose the new monthly payment amount and any available options to mitigate the higher rate (e.g., refinancing or renegotiation of the loan terms).  Click here for a link to Richard Cordray’s speech.