The Real Estate Settlement Procedures Act: Regulation X
Chicago Consumer Attorneys
In January 2014, The Consumer Financial Protection Bureau (CFPB) made important changes to Regulation X of the Real Estate Settlement Procedures Act (RESPA). These changes have created a private right of action for consumers against mortgage loan servicers who failed in their duty to correct irregularities with application of payments, promptly and properly respond to requests for information, assess charges and fees, or comply with timelines for handling applications for loan modifications, short sales, and deeds in lieu of foreclosures in a timely manner.
How Does Regulation X Benefit Homeowners?
In the past, dual tracking was a common occurrence among delinquent borrowers. Even though a homeowner may have been in the middle of obtaining a loan modification, mortgage loan servicers could still move to foreclose, leaving the homeowner without remedy or recourse.
Other impediments to homeowners included an inability to bring a claim for mistakes in escrow calculations, late fees, or unfair corporate advances, or against lenders who failed to provide the homeowner with monthly mortgage statements that were easy to understand. Now, changes to Regulation X and TILA’s Regulation Z have defined new, higher standards for home mortgage lenders, enabling consumers to have more options for legal action in the event of a dispute with their lenders.
Regulation X enforces the following changes:
- Certain information must be provided to borrowers upon request
- Protections are provided to mortgage loan borrowers in connection with force-placed insurance
- Services are obligated to correct errors asserted by mortgage loan borrowers
- Servicers are obligated to establish reasonable policies and procedures
- Servicers must provide information about mortgage loss mitigation options to delinquent borrowers
- Servicers must evaluate borrowers’ applications for available loss mitigation options
- Servicers must establish procedures and policies for providing delinquent borrowers with continuity of contact with servicer personnel
Who May Benefit from a Regulation X Case Review?
Mortgage loan borrowers who meet any of the following criteria should immediately contact Atlas Consumer Law to request a case review:
- Borrowers who have been recently discharged from Chapter 7 or Chapter 13
- Borrowers with loan modifications where the loan modification has not been honored by a loan servicer or successor loan servicer
- Borrowers who have filed bankruptcy to avoid foreclosure, but who had an application for loss mitigation pending
- Borrowers who had a contract to sell their home by way of a short sale, but the servicer failed to make a decision within 30 business days from submission of application and the buyer withdrew
- Borrowers with lender placed or forced placed insurance
- Borrowers who have trial loan modifications that last beyond three months
- Borrowers with a loan modification that is not recognized by a new servicer
- Borrowers with excessive escrow deficiencies
You May Have a Claim Under RESPA!
Consult with Atlas Consumer Law as soon as possible if any of the following describe your situation:
- Your loan servicer failed to honor a loan modification that you both agreed to
- Your loan servicer failed to make a timely decision (within 30 days) on a short sale
- Your loan servicer referred for foreclosure before your payments have been past-due for more than 120 days
- Your servicer moved forward in any way to foreclose after you have submitted a complete loan modification application
- Your servicer wrongfully charged you for legal fees, property inspections, or unnecessary appraisals
- Your servicer failed to properly calculate escrow, resulting in an overcharge
The above actions are considered misconduct under Regulation X, and as such, you may have a claim against your mortgage loan servicer. We encourage you to call Atlas Consumer Law today to speak with an Illinois consumer lawyer about your case. Our team is well known throughout the state for our commitment to protecting the rights of consumers and homeowners against unethical practices.
Fill out an online contact form, or call us at (312) 313-1613 to get started with your case evaluation.