New fed agency to simplify lending paperwork

WASHINGTON – Feb. 14, 2012 – The government’s new consumer watchdog on Monday outlined the first steps of its plans to regulate mortgage servicers, which have come under fire for fraudulent foreclosure practices.

The Consumer Financial Protection Bureau will revamp the billing statements sent to homeowners and the disclosures required for some complicated mortgages. It also is drafting new rules to prevent servicers from improperly charging consumers for homeowner’s insurance.

The massive financial reform legislation passed in 2010 that established the CFPB also required it to take steps to retool the mortgage servicing industry. The plans outlined Monday will apply not only to servicers operated by banks but also to those run by other financial institutions that were previously not subject to federal supervision.

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