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Regulators issue military mortgage guidance
WASHINGTON (6/22/12)--Credit unions must ensure that they inform their members who are in the military and receive Permanent Change of Station (PCS) orders of any available mortgage assistance options and that they don't engage in any deceptive practices.

Those are among the expectations set forth in guidelines issued by the Federal Reserve, the National Credit union Administration,  the Consumer Financial Protection Bureau and other financial regulators to mortgage servicers.

The guidelines mandate that employees of mortgage loan servicers be adequately trained about the options available for assisting military homeowners with PCS orders. Credit unions and other servicers must provide accurate, clear and readily understandable information about available options including the Making Home Affordable Program and other programs offered through Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Veteran's Affairs, and the US Department of Agriculture's Rural Development programs.

The regulators said they are especially concerned about the potential harm that could be caused if servicers do any of the following:

  • Fail to provide homeowners with PCS orders with accurate, clear, and readily understandable information about available assistance options for which the homeowner may qualify based on information known to the servicer.  These options should be consistent with the servicer's public representations and agreements with government agencies;
  • Ask homeowners with PCS orders to waive their legal rights under the Servicemembers Civil Relief Act or any other law as a prerequisite to providing information to the homeowner about available options or evaluating the homeowner's eligibility for assistance;
  • Advise homeowners with PCS orders who are current on their loans and able to make the monthly payment to intentionally skip making payments in order to create the appearance that they are having financial difficulties in order to obtain assistance for which they would not otherwise;
  • Fail to provide a reasonable means for homeowners with PCS orders to obtain information on the status of their request for assistance; and
  • Fail to timely communicate the servicer's decision regarding requests for assistance from homeowners with PCS orders and failing to include an explanation of the reason for any denials.
The guidelines do not require servicers to offer any particular loss mitigation programs. However, if  a regulator determines that a servicer has engaged in any acts or practices that are unfair, deceptive or abusive, or that otherwise violate Federal consumer financial laws and regulations, the agency will take appropriate supervisory and enforcement actions and mandate appropriate corrective actions.

The other agencies that signed on to the guidance are the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

To access the guidance, use the resource link.
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