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New rules enacted for 5 largest mortgage lenders

This week, the nation's largest five mortgage lenders were officially required to comply with new rules set by the national mortgage settlement. For San Diego homeowners facing foreclosure or bankruptcy, this may be very good news.

Wells Fargo, Bank of America, Citibank, Chase and GMAC/Ally must comply with 304 new rules, which include:

  • Providing a single point of contact for borrowers nearing default
  • Responsibility for keeping track of documents sent in during modification requests
  • Not foreclosing on homes while the borrowers are waiting for a modification decision
  • Not advising homeowners to stop making mortgage payments in hopes of qualifying for foreclosure relief

The settlement also included $20 billion in principle loan forgiveness, refinancing and other types of debt relief, but loans owned or backed by Fannie Mae or Freddie Mac would not be eligible for these options. The banks servicing the Fannie Mae and Freddie Mac loans will be required to comply with the new rules.

The settlement was the result of investigations by federal regulators and 49 state attorneys general after claims were made that the banks were involved in robo-signing, or the automatic signing of documents without properly reviewing them.

While there are checks and balances in place to make sure that the banks are accountable and properly servicing the mortgages they hold, the new rules are very difficult for the average homeowner to understand. Homeowners may find it in their best interests to contact a qualified bankruptcy attorney if they are concerned about how their situation is being handled, especially if a modification request has been made.

Source: San Francisco Chronicle, "Lenders must now comply with new rules," Kathleen Pender, Oct. 3, 2012

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